A Case Study in Identifying Gaps and Developing a Common Code of Ethics for Commercial Banks in Sri Lanka
Growing corrupt behavior of employees and its negative consequences to the organization, economy and the society at large, had become a global issue for many years. The stability of a county’s economy depends on the stability of its Financial Sector, mainly on its Banking Industry. Banks do business with public money, and depend heavily on public trust for its stability. Creating and maintaining an ‘ethical image’ through ethical management and ethical behavior of employees are critical to win public trust and confidence. Thus, banks’ operations are governed by many statutory and mandatory rules. The Central Bank of Sri Lanka had issued a mandatory Code of Conduct for Licensed Banks (Customer Charter - 2007), to guide them in customer transactions, to protect the customers. In addition, banks have individual Codes of Ethics, which specify their ethical policies and values, and guide the employees’ behavior at work. However, the Codes differ from bank to bank, depending on each banks’ ethical orientation and priorities. This Case Study is a comparative analysis of the Codes of Ethics of Licensed Commercial banks (LCBs) operating in Sri Lanka, comparing against globally accepted moral standards of Codes, recognized in scholarly literature. The study exposed many gaps in the Codes of LCBs: inadequacy of ethical principles and rules, less clarity of the ethical rules available, less focus on ethical principles and rules, congested contents with other operational rules etc. Authors proposed a common Code of Ethics, based on universally acceptable ethical standards, for the LCBs operating in Sri Lanka, to evaluate the intensity of ethical standards of their Code of Ethics. The study identified 12 universally acceptable moral principles and developed a measure which could be used as a guide by the banks, to self-evaluate the ethical quality of their Codes of Ethics. This research is new in the Sri Lankan banking industry, Thus, have original value and adds many valuable managerial implications.
Keywords: Common Code of Ethics, Universal Standards, Sri Lankan Commercial Banks.
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Faculty of Management Studies & Commerce