An Examination of Ethics in the Financial Industry: Nigeria and Ghana Essay

Introduction

The role of ethics across today’s various industries has been on a stable increase, becoming a major point of interest for experts and researchers. Ethics guide the decision-makers, contributing the development of positive solutions that extend beyond profits and enterprise growth. Instead, today’s activities are expected to attain a new level of positive impact in a ranger of spheres. It includes such topical matters as social justice, equality, environmental protection, and others.

In this regard, businesses emphasize their image component in an attempt to receive good feedback from the public. However, earning its trust is a challenging endeavor the comprise more than loud speeches and formal adherence to the principles of ethics. On the contrary, this proclaimed allegiance is to be underpinned by a strong practical foundation that will reflect the organization’s commitment to the goal. In other words, the public is to see actual evidence of the ethics’ role in the decision-making process.

Today’s environment possesses numerous spheres of human activity that employ millions of people each. This paper is centered around the financial industry as one of the key driving forces of modern economy. The scope of this sector is rather broad, and its impact on societal and economic process remains undeniable. However, the reputation of the financial industry appears to have been sup-optimal in the previous years. More specifically, the activities within the sector have not been associated with ethical considerations and positive practices. Instead, the focus of attention is often said to have been on profits and economic advantages at the expense of ethics.

In this regard, the recent surge of interest in ethical practices has prompted the leading experts and researchers within the financial industry to lay an additional emphasis on this aspect. Nevertheless, the coverage of the matter at hand within the contemporary body of knowledge often leaves much to be desired. The present research serves to address a certain gap that is formed in the case of the financial industry’s ethical practice in Ghana and Nigeria.

In order to address this gap, the paper relies on a comprehensive review of the literature in order to obtain a theoretical framework of reference. The examination of the current body of knowledge will provide valuable insight into the origins of the ethical discussions within the financial industry, in general, as well as their evolution. Based on this foundation, further examinations will be provided, addressing the value of ethics for the organizational goals within the financial industry. Furthermore, the central issue is to be investigated in its close relation to the management practices within the sphere, underlining the nexus of ethics, organizational goals, and leadership in the current environment.

Ethics in the Financial Industry

The present review of the literature aims to describe the origins, evolution, and key elements of ethics in the financial industry, as per the current body of knowledge. The notion itself is not a recent invention, as ethical considerations have always been a part of the general discussion in different industries. The sector of finance is not an exception, and this topic has existed within it for a long time. However, Iqbal and Mirakhor (2017) state that the coverage of the matter at hand remained insufficient until recently. More specifically, the expert community did not lay a strong emphasis on ethics in finance until the global landscape prompted otherwise.

As such, the financial crisis that erupted in 2007-2008 became a major turning point in terms of the discussed issue. For the first time in a long period, the mistakes of the finance market players had lasting repercussions that transcended the limits of the industry. Iqbal and Mirakhor (2017) note that the aftermath of this financial crisis served as a strong incentive for a more in-depth investigation of ethics and its role in the financial industry.

The global community saw the downsides of capitalism in its contemporary state, which prompted them to research ways of mitigating the impact on society. As a result, the focus of attention toward new, previously disregarded dimensions of the industry and its effect on the global community. According to Ferrero et al. (2021), “financial and political economists have been largely concerned with the institutional side of the crisis, often marginalizing an ethical dimension” (p. 77). Prior to the described shift within the industry’s philosophy, experts saw ethical considerations as a nuisance that draws attention away from the actual structural issues.

However, as the adverse social impact of major crises became evident and raised a wave of outrage, the leading agents of the finance sector felt prompted to explore the ethical dimension of their activities. The ideas discussed by Ferrero et al. (2021) are highly important for the present discussion. This information shows that ethical discussions, albeit long established, remained marginalized by the finance community, only becoming relevant when the scale of the crisis exceeded previous levels. As such, ethics remain a relatively fresh addition to the industry.

The development of this paradigm of though intersects with the notion of corporate social responsibility. Bhala (2019) investigates the origins of ethics and its theoretical foundations applied within the finance industry. As per these findings, the overarching principles that define ethics in the discussed context intersect with the millennia-old dogmas and virtues that serve to guide people through life.

In spite of the possible variations between worldviews and beliefs, the core of these principles remains within a similar range in most contexts. More specifically, the purpose of the activities is to avoid harm at all costs and promote the public good. In the case of this century’s crises, the mistakes of the finance sector’s players inflicted damage on the global economy, in general. As a result, society experienced a strong negative impact that undermined people’s quality of life and impeded the growth worldwide. Thus, the core principles of ethics were not followed in this scenario. Moreover, such a development may imply that the global prosperity was compromised for the sake of profits. These discussions show the exact reasons why an emphasis on ethics became relevant, complementing internal matters.

Generally, most researchers relate the origins of the ethical emphasis within the financial industry to the aftermath of economic crises. According to Mele et al. (2017), one of the topical issues of this sector consists of forming a nexus between efficiency and ethics. Experts and scholars investigate the current state of the matter, as well as the historical perspective. This information becomes the foundation, upon which new avenues of the ethics promotion are developed. More specifically, the goal is to “motivate and empower practitioners in the world of finance to commit to justice, fairness and enhanced understanding, and to improving their personal integrity” (p. 609).

The overarching idea is to convince the people involved in finance that their work and its impact extend beyond the immediate professional activities. Today’s environment has become highly complex through the intense globalization, meaning that new developments in one area inevitably affect others. This research rightfully draws attention to the necessity of a harmony, which would effectively incorporate justice and ethics into the workflow of the industry. This way, finance practitioners will see that ethical considerations are an enabler rather than impediment.

The implementation of these principles may be a difficult task, considering the scope of the objective. Historically, financial industry has been characterized by the increased level of controversy and even conflict surrounding this sector of economy. Care (2018) refers to the pursuit of an ethics-efficiency combination as the unresolved puzzle of the industry. According to this research, the mainstream finance remains subject to intense public criticism. The lack of the ethical consideration presence is one of the major enablers of such a tendency. More specifically, the public has built strong negative associations with banking, accounting, and other subsectors of the finance industry.

For decades, the perception of it revolved around profits and various monetary benefits obtained by the practitioners without regard to the interests of society. Thus, experts relate the recent financial crises to a crisis of ethics that reflect the issues deeply engraved in the industry. However, the stance defended by Care (2018) implies that the maximization of profits can co-exist with ethical principles. This idea appears relevant to the current environment, as the stakeholders value ethical practices. As such, maximum profits are impossible without attention to justice.

Within the discussed context, researchers and experts often address the question of whether finance industry is inherently incapable of becoming a virtuous activity. This idea is central to the discussion upheld by Rocchi et al. (2020). This article argues that the sector “may suffer from institutional deformations that subordinate its distinctive goods to the pursuit of external goods” (p. 75). This idea entails a logical assumption that virtue and finance exist in separate dimensions that can hardly intersect. However, Rocchi et al. (2020) warn against the rejection of the positive potential of the industry.

The finance sector operates at the center of the global flow of money and other resources. In the predominantly capitalist environment, these financial instruments exercise a strong influence over the majority of global processes. In other words, ethical practices in the sphere of finance can contribute to the positive initiatives that can make the world a better place. However, for such an outcome to be possible, finance practitioners are to acquire a better understanding of the ethics value of their activities. In other words, the pursuit of ethics and justice is to be informed and aware.

Under these circumstances, the global community has raised its expectations in regard to the demonstration of ethics by the financial industry. The older perceptions of the sector as the opposite of ethical and just continue to prevail within society. At the same time, finance practitioners themselves remain on the path of discovering the hidden potential of ethics in their work. De Swaan (2020) argues that this sector of economy, indeed, possesses many people who are ready to adopt and appraise the contemporary philosophy of ethics.

The financial industry can equally operate on the basis of shared values with the communities, making a positive contribution to promising initiatives. This idea intersects with core principle of corporate social responsibility. More specifically, organizations that profit from the society are expected to give back to the people who enabled their success in the first place. This way, the finance industry can effectively interact with society, maximizing the combined efforts for a sustainable future.

Within an ethical environment, these values are shared, adopted, and practices by all elements of the system. More specifically, the ethical paradigm of the system and each particular organization ultimately needs to become part of the employees’ views. Thus, ethics in the financial industry can be practiced on the systemic, organizational, and individual levels. At the last level, a variety of cultural and personal factor becomes relevant and affects the decision-making process. This idea is explored by Suryanto and Thalassinos (2017) who examine ethical behavior and whistle-blowing in finance and accounting. More specifically, the discussion revolves around Muslim workers and their worldviews.

According to the authors’ findings, employees who practice Islam are inherently less likely to become whistle-blowers and report unlawful activities. However, they commit fully to the principles of “ethics, governance, responsibility and respect” (p. 1725). In this regard, it is indispensable for the decision-makers to investigate culture-specific patterns of ethical practices in finance in order to anticipate the development of the situation. This notion is important, as it reflects the complexity of the financial industry’s landscape.

As it is the case in most parts of the world, the finance sector plays a role of paramount importance in West Africa, namely Ghana and Nigeria. According to Shobande and Enemona (2021), this industry is responsible for “mediating resources and assets within the economy between surplus and deficit units” (para. 1). As such, these companies exercise a strong influence over the distribution of resource that are essential in capitalist environments.

Moreover, the economies that remain in the stage of active development, such as Ghana and Nigeria, demonstrate even stronger reliance on such resources. Thus, their financial industries are charged with creating strong, resilient economies that can respond to the challenges of the time. In the 21^st century, this objective can only be attained through an emphasis on the ethics of the practice, meaning that common interests need to be included in the decision-making process. However, Shobande and Enemona (2021) acknowledge the early development stage of financial ethics in Ghana in Nigeria. This implies that their economies remain subject to crises and other unfortunate developments, whereas the industry’s practitioners have not yet acquired a full understanding of the ethics’ value.

Organizational Goal

Organizational goal represents another key element of the discussion surrounding the business of the 21^st century. This notion is central to the activities of most companies, as it reflects their both short-term and long-term objectives. Historically, the organizational goals were determined by the internal vision of the company’s leadership. Based on the current status and subjective priorities, such goals were developed to reflect the aspirations of the management. In the age of the emphasis on business ethics, the situation has been bound to undergo major transformations. In the current landscape, companies have nurtured the concept of organizational culture.

According to Khayatmoghadam (2020), this term represents the social identity of a company and its position in the complex social landscape of the present. Under these circumstances, organizational goals are forged with a greater influence of various factors that extend beyond the internal vision. The ideas of justice, ethical practices, and positive contribution to society become major determinants of the organizational culture. Without it, companies are likely to lose the support of their stakeholders. Accordingly, ethical considerations serve as a certain compass that helps organizations develop realistic and informed goals.

Within the discussed context, ethical practices exhibit their profound influence on several levels. In fact, one of the key tasks consists of translating organizational goals into the practical dimension. More specifically, Yoo and Jung (2019) argue that organizational goals exist in a strong, direct correlation with the employee behavior. For most workers engaged in the company’s activities, they become the leading point of reference that indicates the priorities and nurtures a certain corporate culture. In other words, the goals determined be the organization’s management inevitably translate into practical solutions and on-site operations.

For example, if the objectives are centered around the maximization of profits, they will nurture a revenue-oriented culture within the company, prompting the corresponding employee behavior. As such, the role of ethical practices in the development of the organizational goals is not to be underestimated. At this stage, the principles of justice and fair play are sowed, nurturing positive approaches among all practitioners within the sphere. Ultimately, the commitment to ethics and corporate social responsibility is impossible without the input of each team member. In turn, such a situation is attained through clearly articulated organizational goals.

As can be inferred from these findings, the effect of ethics is not limited to organizational goals. On the contrary, these two notions form a strong synergy that has the potential to extend ethical and just practices to more profound levels of the company’s activities. Gagne (2018) develops a discussion that revolves around similar ideas. Specifically, her article showcases the process of transforming organizational goals into organizational behavior. Spoken differently, it represents the transition from theory to practice in the corporate environment. As per the described framework, developing ethics-informed goal is the first, yet crucial stage.

Managers face the challenge that consist of condensing their vision into the form of goals and strategies that will determine the further course of action. All the subsequent procedures within the realm of practice stem directly from this first phase, which is why it is vital to introduce the correct objectives. Next, a sequence of action phases transforms this theoretical vision into the practical operations employed across the company. The organizational behavior becomes the ultimate destination of this process. Thus, organizational goals serve as the primary determinant of most internal processes and external relations.

While the discussed concepts may be deemed universal within the financial industry, their practical implementation is subject to considerable variation across specific markets. Ghana and Nigeria represent the developing group of promising economies of Africa. According to Kwakye et al. (2018), Ghana’s case reflects the state’s inability to enforce effective regulations that promote ethics and corporate social responsibility in the finance sector. As a result, African companies experience less external pressure that would prompt to pursue more ethical practices in their operations. This situation is reminiscent of the older paradigm of action, according to which profit maximization and internal vision determined the organizational goals.

Furthermore, as Nigerian and Ghanian managers continue to crave higher social status, corruption retains its influence on the corporate operations (Nwokorie, 2018). Kwakye et al. (2018) investigate the impact of these trends on the goals and performance of such African organizations. As it is concluded, the lack of ethics is associated with poorer performance that affects the sector’s economy as a whole. Ultimately, unless the principles of ethics become incorporated in Ghanian and Nigerian companies’ goals, the possibility of new crises will remain considerable.

Accordingly, it appears possible to observe a certain structure that determines the connection between organizational goals and operational success, as well as the ethics’ role in it. First of all, the cycle begins with the formation of the strategic vision of the financial organization, which is the topical objective of the management. At this stage, it is essential to venture beyond the natural desire to focus on the internal priorities. The modern landscape places an additional emphasis on the corporate social responsibility, which is to be considered by the management when making decisions. Thus, organizational goals are the root of the process, determining the subsequent phases. Establishing them in light of the principles of ethics is essential, since these ideas need to be embedded in the strategies and goals of the company.

Next, through the complex nexus of motivation and communication, organizational goals are translated into the employee vision and organizational behavior. Finally, this phase determines the ultimate success or lack thereof. In Ghana and Nigeria, managerial flaws are observed at the initial stage, often compromising the rest of the operations.

Management Practice

In this regard, it appears relevant to review the role of the management in the discussed corporate processes within the financial industry. Ethics in the finance sector demonstrate a strong influence across most phases of the organizational practice, from the organizational goal formation to the employee behavior. The process of this transition is the key to a successful implementation and reaching the required level of corporate social responsibility needed for the sustainable development of West Africa.

Tefera et al. (2019) center their research around the ideas of corporate social responsibility in an attempt to determine the key aspects of attaining it. They come to a conclusion that, in spite of the name including the adjective “corporate”, it is people who play the pivotal role in the implementation of ethical practices. Indeed, these ideas correspond with the current perception of business as an activity done by the people and for the people. In this context, managers are to understand the role of each category, as well as the ultimate purpose and the ways of attaining it.

First of all, managers of financial organization remain under the constant pressure applied by the range of stakeholders. In most cases, the primary ones are represented by the clients of the organization. However, in today’s environment, the case of the financial industry is highly particular. More specifically, such companies report to their clients as the primary stakeholders, they also bear an increased responsibility for society, in general. According to Ahinful et al. (2019), the pressure of the stakeholders in Ghana is reaching increasingly high levels, prompting managers to find ethical and sustainable solutions for their financial organizations.

In fact, the influence of the people has become stronger that this of the governmental regulators. When companies answer to the whole society, managers are to ensure that they operate on the basis of shared values. In other words, the organizational goals are to remain aligned with the stakeholder perspective for the positive synergy to form. In a way, such a situation reflects the very nature of the corporate social responsibility. At the same time, the key element is to ensure that it is based on the full understanding of its principles and not on superficial vision.

This understanding is the essential component of ethical practices in the financial industry. With stakeholders on one side and the company’s employees on the other, managers remain at the heart of the process. Accordingly, the role of the leadership is to be the source and the leading driving force of ethical practices in the industry. Creating and articulating an organizational goal is an important step but it does not suffice to make meaningful changes.

Moreover, even the most successful leaders cannot accomplish this overarching objective alone. In fact, their strength lies in the ability to engage and motivate their followers through positive leadership practices. Berkovich and Eyal (2019) explore the correlation between moral reasoning, ethics, and leadership style. Their findings imply that the path to ethical practices often comprises ethical dilemmas, and both leaders and followers are to be able to resolve them effectively. In this regard, the implementation of transformational leadership appears to be a useful instrument.

This model of management suggests leader-follower relations based on more than organizational goals and immediate tasks. Instead, transformational leaders rely on shared values and sincere motivation as the primary impetus to achieving their goals (Berkovich and Eyal, 2019). Therefore, in the context of financial ethics, managers are to adopt the philosophy of justice themselves, later focusing on transmitting these values to their followers.

When the chain of principles is formed on the basis of trust and profound motivation, ethics become naturally embedded in the workflow of the organization. This way, the role of the management is become the cornerstone that bridges the gap between workers and stakeholders in a positive unity of ethics and justice. As a result, ethical practices become an integral part of the operations within the financial industry in an informed and sincere way that will account for the best results. This is exactly what is needed for the finance sectors of Nigeria and Ghana. Through enhancing their transformation leadership competencies, these countries’ managers will increase their resilience to systemic challenges and form a sustainable system.

Conclusion

Ultimately, the issue of ethics in the financial industry is related to the interest of all parties involved in the system. From one perspective, ethical practices become indispensable for all spheres of human activities. In the age of progress and globalization, companies remain in the spotlight of the public attention, and the lack of commitment to corporate responsibility makes them subject to intense criticism. In this regard, the adherence to the principles of ethics needs to be profound and sincere, as superficial attempts are likely to undermine the company’s potential even further. Ghana and Nigeria possess the key features of developing economies, in which ethical practices within the finance sector are currently undeveloped. People are the key agents of implementing corporate social responsibility.

Thus, the primary stakeholders, company employees, and managers are become aligned to overcome the challenges and make the industry ethical and sustainable. In West Africa, finance industry leaders can contribute to this process by resorting to transformational practices, synchronizing the philosophies of their followers and society through better resilience. This way, both communities and the industry will synergize, enhancing the economy of the countries and the growth of the industry.

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