Tuesday, November 26, 2013
Ethics in finance
The Ethics in Finance Robin Cosgrov Prize was delivered a week ago in Geneva. Organized Prof. Dembinski and the Observatoire de la Finance, the prize is given to young people strenghening the case for a more ethical finance. Any formal regulation will never be truly effective without a change of "culture" across financial sectors.
Among others, the prize this year went to Prabhay Joshi, who analyzed how the different actors of the LIBOR manipulation interacted. Normally competing banks and individuals, bound by a culture of reciprocity, were cooperating to submit lower or higher rate. This is the dark side of social capital and one of the factors hindering the modernization of market economies in transitions countries, most notably in Russia. Complex financial sectors underpinned by dubious practices (clearly at the expense of the rest of the economy) does not always mean progress.