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Future pathways for ethical banking, new changes in the post-crisis period: A case for micro financing to the poor

Rengarajan Varadarajan
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India

Abstract
The eventualities of the past sordid events in banking industry like financial crisis right from Wall street to micro finance (MF) platform indicate the presence of unethical competitive financial market, profit motivation and moral deterioration among the actors. Adding fuel to fire, forced technology intrusion in the name of branchless banking and financial inclusion, particularly in the unbanked poor client side also would likely widen the inequality gap or tech divide among the people. Ethical dimension in micro financing in particular has not been justifiably delved in earlier studies. In this regard a paradigm shift is inevitable for the future. As against the premise, an attempt has been made in this paper a) to perceive critically the intricate nexus between ethics and economics and its influence over human behavior in their business activities more particularly in micro finance banking b) to prudently look at individual value system through the lens of Amartya Sen as it basically influences for shaping ethical behavior of humankind c) to probe the causative factors for the recent micro financial crisis leading to many unintentional consequences and d) to suggest future pathways for ethical banking and responsible financing to the poor in terms of a covenant ‘Ten commandments for micro finance community’ to be practiced at grass root level.

References

Amartya Sen, 1998 ‘On ethics and economics’ Oxford India paper backs pp. 12-13

Amartya Sen 1998 “Commodities and capabilities’ Oxford India paper backs

Amartya Sen, 2000 “Development as Freedom” Anchor, Reprint edition p 10

Adam Smith 1759 “Theory of moral sentiments’ Edinburg

Almeadow Investing in people’ 2010 “lesson learned in Latin American countries” website

Des Gasper 2004 “Ethics of development” Edinburg studies in world ethics, Edinburg University press

Daryl Collins et al. 2010 “Portfolio of the poor:  How the world’s poor live on $2 a day” Princeton University

Huge Sinclair 2012 “Confessions of a microfinance heretic: How micro lending lost its way and betrayed the poor” Berret-Koehlur publishers Martha

The Hindu 2012 The Indian national English daily newspaper Chennai, April, 24

The Hindu 2012 The Indian national English daily newspaper Chennai, February, 26

Martha C. Nussbaum 2013 “Creating capabilities – The human Development approach”. Belknap press Reprint edition

Milfred Batsman 2010 “Why doesn’t Micro finance work? The destructive rise of local neoliberalism” Zed Books publishers

Rengarajan, V.  2013 Microfinance Principles and approaches : Ten commandments for responsible financing to the poor”. Notion Press.com. pp. 72-73

Rengarajan, V.  2013 Microfinance Principles and approaches : Ten commandments for responsible financing to the poor”. Notion Press.com. pp. 193-194

Ramesh S. Arunachalam 2012 “The Journey of Indian Microfinance –Lessons for the future: AAPTI publications Chennai 2012

Sarah Rotman & Claude Robert 2013 “Mobile money: Even data analytics has limitations” WB.CGAP Blog 18, June www.cgap.org

United Nations 2013 “UN warns on mobile cyber security bugs in bid to prevent attacks” www.reuters.com/article/2013/07/21 mobile banking.

Key words
Economic-ethics nexus, Microfinance industry, Amartya Sen, ethical banking, unethical financial practices, wealth and greed, Ten commandments

Citation
V.Rengarajan (2013), Future pathways for ethical banking, new changes in the post-crisis period: A case for micro financing to the poor, in Leire San-Jose, Jose Luis Retolaza (eds.) Prospective Innovation at Ethical Banking and Finance (Studies in Philosophy, Law and Economics), - Sumy: Vinnychenko M.D., pp.163-183. Available at http://taadler.com/a27