A banking culture that puts financial gain above all else fuels greed and makes bankers more likely to cheat, according to a new study.
Researchers in Switzerland studying bank workers and other professionals in experiments in which they win more money if they cheat has discovered that bankers become more dishonest when they are made particularly aware of their professional role.
When bank employees are primed to think less about their profession and more about normal life, however, they are less inclined to dishonesty, according to the study published in the journal Nature on Nov 19.
“Many scandals have plagued the financial industry in the last decade,” says Ernst Fehr, a researcher at the University of Zurich who co-led the study. “These scandals raise the question whether the business culture in the banking industry is favouring, or at least tolerating, fraudulent or unethical behaviour.”
Fehr’s team conducted the experiment first with bankers, then repeated it with other types of workers as comparisons. The first study involved 128 employees all levels of a large international bank – the researchers were sworn to secrecy about which one – and 80 staff from a range of other banks.
Participants were then divided into a treatment group that answered questions about their profession such as, “What is your function at this bank?” or a control group that answered questions unrelated to work, such as “How many hours of TV do you watch each week?”
They were then asked to toss a coin 10 times, unobserved, and report the results. With each toss, they knew whether heads or tails would yield a US$20 (RM67) reward. They were also told that they could keep their winnings if their coin-toss accumulations were more than or equal to those of a randomly selected subject from a pilot study.
Given maximum winnings of US$200, Fehr’s team found that there was “a considerable incentive to cheat.”
Cheating as banking
The results show that the control group reported 51.6% winning tosses and the treatment group – whose banking identity had been emphasised to them – reported 58.2% as wins, giving a misrepresentation rate of 16%. The proportion of subjects cheating was 26%.
The same experiments with employees in other sectors – including manufacturing, telecommunications and pharmaceuticals – showed that they don’t become more dishonest when their professional identity or banking-related information is emphasised.
What does this mean? Perhaps your banker is not as trustworthy as he claims to be. But please don’t quote us on this – it’s all in the numbers. – Reuters