IMPACT OF ETHICAL PRACTICES ON PROFIT OF BANKING SECTOR

Abstract

Purpose The dissertation aims to determine the ethics of a commercial banking activity encompassing various social, environmental, and economic practices. Banking institutions often play a leading role in financing numerous projects, whose paradigms are constantly being updated due to external phenomena, such as sudden changes in financial and economic markets; globalization; global financial crises; development and advancement of information and communication technologies (I.C.T.); greater transparency in the relationship between banks; and other changes in the environment, involving governments, customers, community, employees and shareholders. Methodology & Design The study follows a qualitative approach collecting interviews from 15 banking executives in Pakistan to determine how ethical practices influence the banking sector's profits. Findings Findings show that the ethical behavior of banks directly influences the profit margin in Pakistan. However, the commercial bank requires its management to deploy ethical principles and standards to support its practices in accomplishing its targets. Limitations The study has worked with qualitative data collection method; however, it would be beneficial for the study it is worked with a mixed approach to use statistics. Recommendations The banks in Pakistan must deploy a differentiation strategy to increase the product line to manage its profits and accomplish their business targets.