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By: Maricris C. Ayala

This policy essay highlights ethical issues in banking

and a brief discussion on how ethical banking helps in
achieving sustainable development of banking and
finance without compromising its corporate social
responsibility. This paper considers the corporate
philosophy and vision of the Development Bank of the
Philippines (DBP). This paper concludes that banking
practices cannot go on as independent of ethics.

Ethical banking is not just about purely investing. It often tries to promote positive
social change and aims to achieve sustainable environment. Each bank performs
various functions like money lending, accepting deposits, transferring of money and
management of foreign exchange. The Cooperative Bank (UK) offers its customers
home energy rating on purchases of consumer durables. The purpose is to enable
them to better understand how energy efficient a property is and how to make
improvements. Moreover, banks mortgages include carbon-offset features. Every
year that a customer holds a mortgage, the bank offsets a fifth of the carbon
dioxide emissions arising from a typical households energy consumption. The
offset money were used for reforestation in Uganda, a Bangladesh project that
trains local people to build energy efficient stoves and a Bulgaria project supporting
micro-hydro electricity generation (Goyal and Joshi, 2011).

The banks responsibility extends to government, depositors, investors,

shareholders, staff and the community. Banks have ethical responsibility, but it is
not protected by limited liability from the consequences of their actions (Green,
1989). As the banks encountered complex and conflicting issues, their commitment
to ethical behavior would be tested. Financial institutions -including banks of all
sorts, credit agencies, private equity firms, pension funds and insurance companies
have long been considered by most people to have common objective of wealth.
Several financial institutions measure their success solely on the basis of their
capacity to maximize financial assets, that is, it has been measured with evaluation
factors that review only their monetary bottom-line results. How much return do
they get on their investment decisions? How much are they able to maximize the
assets in their custody? How much profit can they derive from the loans and credits
they subscribe, from the bonds they float, from the equity they successfully issue on
the financial markets? Banks are judged by their ability to develop financial
instruments such as complex derivatives and sophisticated credit schemes that help
connect the money of investors with the companies in need of those financial
resources in the best possible way.

Unlike the other local banks, the Development Bank of the Philippines (DBP) has
strengthened its corporate social responsibility efforts, enabling it to share the
benefits of its continued financial success with disadvantaged sectors of the
society. The Banks CSR initiatives are grouped into three major areas:

Education - Through the DBP Endowment for Education Program

(DEEP), the Bank sends poor but deserving high school students to
college. Scholarship assistance covers the whole range of the students
requirements, including books, cost of living, and allowances.

Environment -The DBP Forest Program is a non-credit program that aims to

stop denudation and restore the countrys forest cover through organized
collaboration with government and non-government organizations, state
universities and colleges, peoples organizations and other qualified forest

OFW Advocacy - DBP promotes the welfare of overseas Filipino workers and
their families through an integrated and focused approach in uplifting the
Banks can channel economic resources in different ways that make money result in
some form of evil-doing. The two main ways in which banks can do this are (a) by
lending money to others, that is, by issuing credit facilities to their clients, these
being customers corporations, governments, individuals, etc., and (b) by actively
and directly investing money, that is, owning shares. When banks lend money to
others, the bank may not be doing wrong by itself; it is these other entities which
might be engaged in wrong-doing. However, the banks still have to be morally
responsible. Serrano, 2010). How banks use money is not irrelevant from a moral
and ethical perspective. Crime, pollution, corruption, violation of human rights,
threats to human life, totalitarian regimes, and all sorts of wrong-doing need and
use money every year. Financial institutions play a key role in the supply and
movement of money. The banking industry plays a key role in the velocity of money
supply. Whenever investors money is channeled to evil-investments, it is the bank
who is guilty of this wrong-doing and not the individual investor, unless of course,
the individual investor was aware of the wrong-doing, and if he was a significant
investor to influence the company or the fund in question.

Ethically-responsible, respectful banking and financing industries are possible and

they are already starting to emerge. Some banks in developed countries have
realized the importance of being ethical in the conduct of their business. Moreover,
individual investors play a key role in putting pressure on banks and regulators to
let them know that banking practices cannot go on as independent of ethics any


Goyal , K. and Joshi, V. (2011). A Study of Social and Ethical Issues in Banking
Green, C. (1989). Business Ethics in Banking. Journal of Business Ethics.
Serrano, R. (2010). Ethical Issues Facing the Banking Industry.

Development Bank of the Philippines (DBP):

Mission Statement
We will work for raising the level of competitiveness of the economy for
sustainable growth.
We will support infrastructure development, responsible entrepreneurship,
efficient social services and protection of the environment
We will promote and maintain the highest standards of service and corporate

Corporate Vision
By 2016, a globally-recognized development financial institution, serving as a catalyst
for a progressive and poverty-free Philippines.

Core Values
Integrity (Honesty, Truthfulness, Transparency)
Excellence (Competence, Dedication to Work, Professionalism)
Teamwork (Harmony, Cooperation, Synergy)
Service to Others (Customer Oriented)
Love for the Filipino (Love of country and its people everywhere)