Banking

This chapter provides an overview of ethics in banking by focusing on the core process of financial intermediation that banks engage in through accepting deposits from savers and lending to borrowers who seek credit. Banks lend on a variety of bases and terms, including overdraft facilities associated with checking accounts, and term loans. The process of financial intermediation is illustrated with a simple diagram. The bank makes its margin by charging borrowers, on average, a higher rate of interest than it pays, on average, to savers. The chapter considers various possible responsibilities that a bank might have in relation to its lending activities-thus focusing on the right-hand side of the model. It then considers how some depositors might have more highly developed and nuanced interests or concerns regarding borrowers or the purposes for which their money is lent, thus reaching across the bank bridge, or seeing through the veil.