According to a new economic study from Chicago Booth postdoctoral scholar Alain Cohn and Ernst Fehr and Michel André Maréchal, both of the University of Zurich, business culture in the banking industry implicitly favors dishonest behavior.
“Business Culture and Dishonesty in the Banking Industry,” published in the journal Nature, asks these questions that formed the basis for the study, which found that bank employees are in principle not more dishonest than their colleagues in other industries:
Are bank employees by nature less honest people? Or does the business culture in the banking sector favor dishonest behavior?
The findings indicated that the business culture in the banking sector implicitly favors dishonest behavior, suggesting that the implementation of a healthy business culture is of great importance in order to restore trust in the banking industry.
For the study, approximately 200 bank employees, 128 from a large international bank and 80 from other banks, were recruited. Each was randomly assigned to one of two experimental conditions:
In the experimental group, the participants were reminded of their occupational role and the associated behavioral norms with appropriate questions. In the control group, participatants were reminded of their non-occupational role in their leisure time and the associated norms.
All participants completed a task that would allow them to increase their income by up to $200 if they behaved dishonestly. The result? Bank employees in the experimental group, where their occupational role in the banking sector was made salient, behaved significantly more dishonestly.
Cohn, who worked on the paper while he was a postdoctoral scholar at the University of Zurich and joined Chicago Booth’s Center for Decision Research this fall, suggests concrete measures that could counteract the problem.
“The banks could encourage honest behavior by changing the industry’s informal rules of behavior. Several experts and supervisory authorities suggest, for example, that bank employees should take a professional oath, similar to the Hippocratic Oath for physicians.”
You can read the original press release here.