ETHICAL BANKING, AS AN ALTERNATIVE TO CONVENTIONAL BANKING? A LITERATURE REVIEW

Abstract

Conventional Banking has so far been proved to be inadequate in providing solutions to socio-economic issues, as their focus is on increasing wealth. This was proven with the world economic downturn in 2007. Banks are losing its Values; there is a segment of society which is still excluded from banking. Banking too has contributed to the degradation of environment. Banks are also under scrutiny by Regulatory bodies and Governments for unethical practices. Therefore, it is necessary to judge banks not only on financial performance but also on its ability to maintain Ethical Values, Financial Inclusion and Responsible Behaviour, hence; a
need arose for a new version of banking system which could address issues so far neglected by Conventional Banking. Alternative
Banking systems are emerging such as Ethical Banking. Ethical Banking once developed could broad base the banking community. Although many researches had been carried out in the global scale on this subject, there were no researches conducted on this subject in Sri Lanka. The purpose of this paper is to explore whether Ethical banking can be presented as an alternative to conventional banking. This study is totally a desk research in the form of a literature review.

Keywords: Conventional Banking, Ethical Banking, Financial inclusion, Sustainable Development