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2022 | OriginalPaper | Chapter

2. Ethics in Finance: Definition

Author : Cristina Rovera

Published in: Ethics in Banking

Publisher: Springer Nature Switzerland

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Abstract

Tackling the subject of “ethics” is a difficult matter for anyone interested in Finance. What can possibly be “ethical” about money? When economists think about money, they think about big banks, mutual funds, speculation, arbitrage, profit-seeking, and sometimes even money laundering or criminal trafficking. Yet the concept of ethical finance does exist and is regulated by a wide variety of sources.

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previous chapter Introduction

next chapter The ESG World

An American economist, first president of the University of Iowa (1964–1969), then of Claremont Graduate University (1970–1971)

Described in detail later on.

From Dobson, J. (1993), The Role of Ethics in Finance, Financial Analysts Journal, p. 58.

In religious knightly orders, members take vows of chastity, obedience and poverty, but also of combat. The members of the order are therefore “men of arms”, not men of the church.

To mention the most famous. The list of religious-military orders is almost endless.

Indeed, the historical name of interest is “use”, with the meaning of usury.

Only after the revolution did the new civil code allow the application of legal interest as long as it was limited to 5%.

It is interesting to note that, for a long time—once the interest itself had been authorised—no attention was paid to the value imposed, which meant that it took years before a legal definition of usury was reached with reference to the amount of the rate.

Indifference curves are the graphical representation of equations which, by mixing a basket of goods, grant the consumer constant utility.

Paretian distribution is a distribution of probability that describes the distribution of income.

The efficient frontier is graphically represented as the curve that collects the set of portfolios that minimise the risk for every level of return or as the set of portfolios that maximise the return for every level of risk.

Monetarism deals with the study of monetary policies. Friedman sustained that inflation is a monetary phenomenon, controllable by central banks, which must decide the money supply according to national productivity and the law of supply and demand for goods. The presence of inflation means that the supply of money is redundant in relation to the production of and demand for goods.

Salomon Brothers was the most profitable investment bank on Wall Street during the 1980s and 1990s.

In June 1998, the spread was just 5 basis points, meaning that the maximum profit that could be made on a capital of $1 million was just $5,000.

The crisis affected some South-East Asian countries between 1997 and 1998. The cause was the heavy indebtedness of private corporate banks, which led to speculation, currency depreciation and capital outflows by foreign investors. The collapse of the stock market was accompanied by numerous bankruptcies and the financial crisis then had repercussions on the real and social economy, with rising unemployment and inflation.

A number of articles have been written on the subject, with authors including Rovera (2015, 2016), Rovera and Damilano (2018, 2020), Damilano et al. (2019), along with Reports, including the latest publications by the University of Cambridge (2020, 2021) and Politecnico di Milano (2021).

Regulatory transposition is expected soon.

Private individuals wishing to carry out a charitable work could also contribute assets for the pursuit of a goal. The donor permanently relinquished the assets contributed and claimed no ownership rights over the foundation.

Recently the Italian legislator decided to turn the biggest popular banks into joint-stock companies, to align their new nature with the legal status.

Sometimes, when the translation prevents the original meaning of the word from being preserved, the term is left in the original language.

A Business Angel is an informal investor who offers capital and knowledge to start-ups with good development prospects. The Venture Capitalist plays the same role as the Business Angel, but identifies as an institutional investor, capable of offering larger amounts of funds to the company in need. On this subject, we would like to mention the main reports drawn up by the respective networks: IBAN (Italian Business Angels Network), EBAN (European Business Angels Network) and ACA (Angel Capital Association for USA).

The first was in Verona, followed—among the most important cities—by those in Rome, Milan, Turin, Padua, Florence and Reggio Emilia.

Costa, G., Gianecchini, M. (2019). Risorse umane. Persone, relazioni e valore, McGraw-Hill

Damilano, M., De Vincentiis, P., Isaia, E., Pia, P., Rovera, C. (June 2019), “Risk Management Instruments Offered by P2P LendingPlatforms. A Cross-Country Empirical Analysis Based on a Scoring System”, in “The Future of Risk Management, Volume II - Perspectives on Financial and Corporate Strategies”, ed. by Paola De Vincentiis, Francesca Culasso, Stefano A. Cerrato, V.v. A.a., PalgraveMacmillan, chap. 1, pp. 3–42.

EU Regulation (2020). European crowdfunding service providers for business

Rovera C., (2015), “Il crowdfunding bancario italiano”, in “FOOD & HERITAGE. Sostenibilità economico – aziendale e valorizzazione del territorio”, AA.VV., G. Giappichelli Editor, Second Part - chap. 7, pp. 475–491.

Rovera C., “Banche italiane e piattaforme crowd”, in ImpresaProgetto, Electronic Journal of Management, www.impresaprogetto.it, N. 2/2016, pp. 1–26.

Rovera C., Damilano, M., “The crowdfunding: a new financialinstrument for the start-ups?”, in International Journal of Business and Management, Vol. 13, No. 11; 2018, pp. 199–213.

Rovera C., Damilano, M., “The crowdfunding: a new financialinstrument for the start-ups?”, in “CurrentPerspective to Economics and Management”, ed. by Dr. Kwong Fai Andrew Lo, Book Publisher International, Hooghly, India, 2020, Vol. 4, chap. 1, pp. 1–16.

Sen, A. K (2000). Lo sviluppo è libertà. Perché non c'è crescita senza democrazia, Mondadori

Title: Ethics in Finance: Definition
Author: Cristina Rovera
Publisher: Springer Nature Switzerland
Book: Ethics in Banking
Print ISBN: 978-3-031-22147-7

Electronic ISBN: 978-3-031-22148-4

Copyright Year: 2022
DOI: https://doi.org/10.1007/978-3-031-22148-4_2

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