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Source: Encyclopedia of Banking & Finance (9h Edition) by Charles J Woelfel
(We recommend this as work of authority.)

A branch of philosophy that is the systematic study of reflective choice, of the standards of right and wrong by which it is to be guided, and of the goods toward which it may ultimately be directed.  (Philip Wheelwright, A Critical Introduction to Ethics).  This definition emphasizes deliberate choice, moral principles, and the consequences of decisions.  In a broad sense, ethical behavior is (1) that which produces a good instead of an evil or (2) that which conforms to moral principles.

The most basic requirement of any ethical system is rationality.  Rationality implies that what is specified is in conformity with reason, is nondeceiving (honest and authentic), and is attainable.  An ethical system must be based on reality at the time and under the existing circumstances, i.e., virtue over vice.  The value structure expressed in the system's standards should indicate the means of achieving the results it promises, and allowances should be made for diversity (the exception rule).

The philosophical choice to be ethical requires that one be free and that one accept the responsibilities that freedom bestows.  Adhering to a value system provides continuity (consistent behavior) and internal controls (self-discipline and personal responsibility).  Major factors influencing ethical behavior include the law, government regulation, social pressure, industry and company ethical codes, and personal standards.

A distinction can be made between ethical, professional, and legal conduct.  Ethical conduct implies voluntary behavior or internal dispositions to act for which the individual can be held responsible to a recognized standard of right and wrong.  Professional conduct refers to standards of conduct that are normal, expected, or precedented in a particular profession, such as law or accounting.  Professional standards prescribe the basis upon which professionals ought to conduct their activities.  In addition, professional standards establish the basis by which a profession can be explained, interpreted, and judged.  Professional and ethical standards can be distinguished from legal standards, which are established by the rules, laws, and conventions imposed by legislative and administrative authorities.  Ethical, professional, and legal standards sometimes overlap.


ABA/BNA Lawyer's Manual on Professional Conduct.  Bureau of National Affairs, Inc., Washington, DC. Looseleaf.

BANK ADMINISTRATION INSTITUTE.  Codes of Conduct in the Financial Services Industry.  Bank Administration Institute, Rolling Meadows, IL, 1987.

CAVANAUGH, G. F.  American Business Values.  Prentice Hall, Inc., Englewood Cliffs NJ, 1984.

Journal of Business Ethics.

Journal of Ethics.

Marx, T.G.  Business and Society:  Economic, Moral and Political Foundations.  Prentice Hall, Inc., Englewood Cliffs, NJ, 1985.

SEVERINSEN, K.  "Executives Stress the Importance of Business Ethics.,"  Savings Institutions.

THOMPSON, T.W.  "The Banker Ethic in a Sales Culture."  U.S. Banker, August 1987.

URANGA, D.  "Navigating the Grey Zone:  Ethics in Credit Management."  Business Credit, June 1988.

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