Economists' Hubris – The Case of Business Ethics in Financial Services

Journal of Financial Transformation, Vol. 43, pp. 38-61

24 Pages Posted: 9 Feb 2016 Last revised: 31 May 2016

Date Written: February 9, 2016


This is the sixth article in the Economists' hubris paper series, which aim to critically examine the practical applications of academic thinking. The focus of this article is business ethics, with a specific focus on the financial services industry. The main challenges that one faces in determining whether businesses do in fact act unethically, intentionally or otherwise, are that there are no universally agreed parameters for describing ethical behavior, that ethicality seems to be in the eye of the beholder and that since we are relying solely on external data, and do not have access to the thinking processes that lead to different business decisions, we are unable to state categorically that the management knew ex-post that a given decision would result in an unethical outcome. Given these difficulties, this article suggests that firstly, while most businesses don’t necessarily set out to act unethically, when ethics and profitability collide the latter seems to win most of the time and secondly, that should companies decide to, or inadvertently, act unethically they have learned from the actions of western governments how to manage the ramifications. The increasing influence that businesses now have over those that monitor them, including governments and the media, could potentially lead to corporations becoming less concerned about the ethical ramifications of their actions and consequently result in the concept of business ethics becoming even less viable from a practical perspective.

Keywords: Business ethics; financial services; business culture; risk culture; business and media; financial crisis

JEL Classification: G20; G21; G24; G28; K22; M14

Suggested Citation

Shojai, Shahin, Economists' Hubris – The Case of Business Ethics in Financial Services (February 9, 2016). Journal of Financial Transformation, Vol. 43, pp. 38-61. Available at SSRN: or

Shahin Shojai (Contact Author)

Capco Institute ( email )

United Arab Emirates

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