The latest research results on psychological aspects of unethical behavior in the banking industry has been provided by Prof. Thomas Oberlechner, psychology professor at Webster University and head of department. In cooperation with CFA Institute, the world’s largest association of investment professionals including more than 90.000 members, Thomas Oberlechner informs us about his recent research results, explaining why the finance and investment sector is especially susceptible to unethical behavior, such as the finance scandals of Enron and BAWAG.

To the question of why he was robbing banks, Willie Sutton, once a successful bank robber, provided following answer: “Because that’s where the money is.” Apart from the fact that the banking sector constitutes the most attractive business sector for fraud, as also shown by Willie’s answer, Thomas Oberlechner directs our attention to one important aspect that characterizes the very essence of the banking sector: Anonymity of its participants and the resulting lack of psychological closeness to its clients. When clients remain anonymous and remote, the willingness to engage in unethical behavior rises.

Yet another crucial aspect of unethical behavior concerns social influences, such as the destructive consequences of unethical leadership and the power of social norms. Thomas Oberlechner emphasizes the importance of conformity in this context. Accordingly, members tend to conform when joined into groups, meaning that individuals take on the ethical position of the group rather than pursuing their own view of what is moral or immoral.  

Among other aspects, these are subjects that Thomas Oberlechner addresses while applying psychology in understanding and solving ethical issues.

The Psychology of Ethics in the Finance and Investment Industry

byThomas Oberlechner

Published            June 26^th 2007
Details                Paperback, 92 pages
ISBN                   0943205956                

Available online at  www.cfapubs.org