ZEMEN COLLEGDE OF POST GRADUATES

THE PRACTICES AND PROBLEMS OF PROFFESSIONAL INTEGRITY AND

ETHICS IN PRIVATE BANKS: IN THE CASE OF BUNNA INTERNATIONAL BANK

MBA. Research Proposal

By

Hilu Misganaw

Program: Business Administration

Advisor:

Feb. 2024
Dessie, Ethiop

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TABLE OF CONTENTS

Contents
Pages
TABLE OF CONTENTS...................................................................................................................ii

LIST OF TABLES.............................................................................................................................vi

List of Figures...................................................................................................................................vii

CHAPTER ONE.................................................................................................................................1

1. INTRODUCTION..........................................................................................................................1

1.1 Background of the Study..........................................................................................................1

1.2. Statement of the problem.........................................................................................................2

1.3. Basic Research Questions........................................................................................................3

1.4. Objectives of the Study............................................................................................................3

1.4.1. General Objective.............................................................................................................3

1.4.2. Specific Objectives:..........................................................................................................3

1.5. Significance of the Study.........................................................................................................4

1.6. Limitation of the study.............................................................................................................4

1.7. Delimitation of the Study.........................................................................................................5

CHAPTER TWO................................................................................................................................6

2. REVIEW OF RELATED LITERATURE......................................................................................6

2.1. Introduction..............................................................................................................................6

2.1.1. Banking.............................................................................................................................6

2.2. Overview of the study..............................................................................................................6

2.2.1. History of Bunna International Bank................................................................................6

2.3. Definition.................................................................................................................................7

2.3.1. What is Ethics?.................................................................................................................7

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 2.3.2. Profession and Professional?............................................................................................8

2.3.3. What Are Workplace Ethics?...........................................................................................8

2.4. Theoretical literature review....................................................................................................9

2.4.1. Views on banking ethics...................................................................................................9

2.4.2. The Basic Ethical Principles in Banking........................................................................10

2.4.3. Professionalism in ethics................................................................................................10

2.4.4. Written Code of Ethics...................................................................................................11

2.4.5. Professional codes of ethics............................................................................................12

2.5. The Concept of Bank Ethics and Professionalism.................................................................14

2.5.1. Why to study Ethics........................................................................................................15

2.5.2 Ethics Programs...............................................................................................................15

2.6. Empirical Studies on Ethical Behavior..................................................................................16

2.6.1. Ethics Training................................................................................................................17

2.6.2. Ethical Leadership..........................................................................................................17

2.6.3. Ethics and Employee Performance.................................................................................18

2.6.4. Application of Ethics to Banks’ staff..............................................................................20

2.6.5. Why Ethics and Professionalism in Banking?................................................................22

2.6.6. Unethical Practices/Unprofessional Conduct in Banks..................................................24

2.6.7. What Bunna International Bank Documents says about Ethics.....................................25

2.7. Conceptual Framework..........................................................................................................25

CHAPTER THREE..........................................................................................................................27

3. RESEARCH DESIGN AND METHODOLGY...........................................................................27

3.1. Introduction............................................................................................................................27

3.2 Research Design.....................................................................................................................27

3.3. Research Approach................................................................................................................28

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 3.4. Sample Design.......................................................................................................................28

3.4.1. Study and target population............................................................................................28

3.4.2. Sampling frame and unit.................................................................................................28

3.4.3. Sample size.....................................................................................................................29

3.5. Sampling method...................................................................................................................29

3.6 Source of data and the Collection method..............................................................................30

3.6.1. Primary Source of Data..................................................................................................30

3.6.2. Secondary Source of Data..............................................................................................30

3.7. Instruments of Data Collection..............................................................................................31

3.7.1. Questionnaires................................................................................................................31

3.8. Data Analysis Method and Interpretation..............................................................................31

3.9. Reliability and Validity......................................................................................................32

3.10. Ethical Consideration...........................................................................................................32

4. WORK PLAN AND BUDGET BREAK DOWN........................................................................33

4.1. Work Plan..............................................................................................................................33

4.2. Budget Break Down..............................................................................................................34

REFERENCE...................................................................................................................................35

APPENDIX.......................................................................................................................................41

Dear Respondent,......................................................................................................................41

II. Questionnaire.......................................................................................................................42

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 LIST OF ACRONYMS AND ABIRIVATIONS

ATM Automatic Teller Machine

BIB Bunna International Bank
BOD Board of Directors
CEO Chief Executive Officer
ICT Information Communication Technology
NBE National Bank of Ethiopia
POS Point of Sale
SPSS Statistical Package for Social Science
STD Standard Deviation

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 LIST OF TABLES

Table 3.1: List of participant…………………………………………..…………….…....29

Table 3.2: Method of sampling……………………………………….…………………...30
Table 4.1: Time schedule…………………………………………….……………………33
Table 4.1: Per-diem and transport cost………………………………..…………………...34
Table 4.3 Stationary…………………………………………………..……………………34
Table 4.4 Cost summary………………………………………………..………………….34

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 LIST OF FIGURES

Fig 2.1.Conceptual framework………………………………………………………………26

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 CHAPTER ONE

1. INTRODUCTION

1.1 Background of the Study

Just like other financial and credit institutions, banks have an important role in a country’s
economy, accounting for more than 80 percent of the financial market. Banks try to perform a
wide range of financial services to the best of their ability Vysiniauskiene, kundrotas(2002).
Banks play multifarious roles which include acting as financial intermediary between the surplus
generating units and the deficit spending ones. Business success depends on the ethics or morals
of entrepreneurs and on the trust earned on that basis Jasevičienė (2012)

Banks’ activities are closely related to the confidence of the public, which is to a great extent
driven by the degree of responsibility with which banks’ management and employees treat
clients, the competition and cooperate with one another. Another important factor is how honest
and fair they are in performing their duties, whether they are reliable, principled, benevolent,
loyal to the bank, work transparently, place the interests of the bank above their own. There are a
lot of models designed to explain the way people make decisions and the factors that affect the
degree of ethics. The stages of a person’s moral development that one progresses through while
seeking personal advancement and the judgments that one makes are addressed by Kohlberg’s
model of moral development (Pruskus, 2002).

Banks and financial markets are essential pillars of every advanced economy, and banking
services are a key requirement for economic pillar development. The recent wave of problematic
financial practices and scandals involving fraud, however, has caused serious economic damage
and may threaten the stability and reputation of banks and the financial sector as a whole.

The banking experience shows that success is driven by high ethical standards when it comes to
the quality of services, the culture of customer service, the management, and the qualifications of
the staff and the appreciation of their work. Failure to abide by the norms of ethics and, in some
cases, lack of business transparency was among the reasons that caused the global financial
crisis, which has led to banking difficulties for some countries. Confidence in banks is a key to
successful banking. Banks can only work well when the public trust them. Ensuring safety of
banking activities is a challenging task indeed. It depends heavily both on the economic
condition of the country and, in the environment of an open economy, the tendencies of
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development of countries worldwide as well. The ongoing processes of global integration,
internationalization, and the continuous financial innovations bring the possibilities to directly
affect banking operations to a minimum. As a result, the solution of banks’ problems depends on
the attitude and confidence of market players. Among other things, the rating of confidence in
banks greatly depends on skilled supervision. (Ailemen and Oluwanton (2015).

In recent years, ethical concerns in business have become complex because of the international
and expanded nature of many large enterprises and because of the complexity of economic,
social, global, natural, political, and legal and government regulations and environment.

The onus therefore lies on companies including banks to decide to constantly go by ethical
principles or to adjust to local ethics and culture (Sullivan 2009: 19). This means that, ethics in
business does not only try to come up with standards that employees must follow, but it also tries
to motivate employees, managers and members of the board to reflect and make decisions in
tandem of the values of the organization (Sullivan and Shkolnikov 2006).

According to Sikka (2008), “fraudulent financial practices seem to be part of an “enterprise

culture” that persuades many to believe that “bending the rules” for personal gain is evidence of
business acumen”. This attitude has led to the distrusts of banks in Ethiopia, which brought about
the desire to introduce a Code of Ethics and Professionalism in the industry to stop the detracting
menace and also to sanitize the industry. Banks are not only expected to operate professionally
but ethically so that the general public would have confidence in the system.

1.2. Statement of the problem

The fight against unethical comportment problems is painstaking and long-time taking which
require changing attitudes, establishing transparent procedures, carrying out consistent trainings
and holding employees accountable, strengthening the controlling system, and facilitating the
active participation of employees. Hence, recognizing the multifaceted economic, social, political
and environmental dangers of unethical employee in the financial sectors, the Ethiopian
government and National Bank has implemented statewide strategies to halt the dangers of
critical ethics tribulations.

The NBE Hence, the commission has been working aggressively to the level that corruption
cannot be an impediment for development, good governance and democracy in the country.
Thus, many preventive measures involving administrative, legal, social, economic and educative
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measures have been put in place to eliminate the threat of fraud. Despite all the actions put in
place, however, unethical behaviors and corruption are still major challenges in the financial
sectors eroding public trust on the bank. Employees are frequently seen indulging in unethical
practices and corruption offenses. Despite the importance of Code of Conduct and ethical
integrity, most of the researches or unpublished studied.

However, there was no study made on the practice and problems of professional integrity
specifically at Bunna Bank, but still this research only involve top management officers, the
researcher believes there must be wider scope to the next researcher. This therefore raised the
need for further research in the field of the study in addition this will give insight for the
researcher to fill the knowledge gap about ethics and professional integrity not only in Bunna
Bank but also the rest of the banks.

1.3. Basic Research Questions

The point that why the bank employees have indulged in crimes of gross breaches of trust and
good faith need to be studied to restore a measure of and integrity in financial institutions.

Therefore, this study tries to investigate and seek answers for the following questions:

1. What are the major values and importance of workplace ethics in Buna banks?

2. What are the manifestations of ethical behavior of employees in Buna banks?

3. What major types of unethical practices among employees of Buna Bank?

1.4. Objectives of the Study

1.4.1. General Objective

The general objective of the study was to assess the ethical challenges of employees in Bunna
bank.

1.4.2. Specific Objectives:

The objective of this study is to test how code of ethics is effective in the wellbeing of the bank
and how it helps to prevent fraud and other unethical behaviors. More specifically:

1. To identify the major values and importance of workplace ethics in Buna Banks.
2. To find out the manifestations of ethical behaviors in Buna Banks.
3. To identify the major types of unethical practices among employees of Buna Bank.
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1.5. Significance of the Study

It is clear that problems relating unethical employees cannot be eliminated or even significantly
reduced unless some altering trainings and remuneration subsists. Even so there might be some
employees who try to misuse their power in the bank. Therefore preventive measures should be
planned and implemented in sustained and effective manner. Hence, to bring the desired result,
those preventive and curative measures must be boosted by research findings and alternative
measures. Accordingly, by identifying the ethical challenges of bank industry employees in the
bank sector, this study may have the following significance:

1. Contributing as source of research and knowledge regarding bank deception for researchers,
Students and the bank employees at large.

2. Revealing bank employees perception towards ethics, accountability, transparency and service
provision and to grab the attention of the bank authority as well as the government to act on the
problem. This scenario has created the desire to introduce and enforce strong Code of Ethics in
BIB in addition to strengthening and enforcing rules and regulations to deal with the increasing
number of frauds and unethical practices. “Banks are not only expected to operate professionally
but ethically” so that the public would have confidence in the industry. Ethics would also play a
great role to test if there is any distress in BIB and prevent the collapse of the Bank like what has
happened in European countries some years back.

1.6. Limitation of the study

There might be limitation in finding available literature discussing the application in BIB.
Besides, limitation might be encountered in securing reliable information from respondents of the
questionnaires that has been conducted

 During data collection some respondents are not willing to give detail information
 Lack of availability of secondary data especially the practice and problem of
ethics in private bank
 Lack of sufficient materials from the bank

The researcher tried to solve this problem by creating friendly relationship and telling the
respondents that their response will highly contribute to the future improvement of BIB.

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1.7. Delimitation of the Study

To come with effective and better study, the study would be conducted on direct concern of
directors and professional officers of BIB with the total amount of 50 respondents. Therefore,
the study is limited to BIB. The outcome of the research may not be conclusive for the whole
private banks but is expected to come up with facts that may be true for many private banks.

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 CHAPTER TWO

2. REVIEW OF RELATED LITERATURE

2.1. Introduction

Ethics is a universally sensitive topic. The importance of ethical behavior in the financial sectors
is especially important since business depends as much on reputation as on performance
(Brickley et al, 2002). Banking sector, being an intermediary between the depositor and creditor
must be more sensitive for the ethicality of its transactions. A respectable bank is expected to
have honesty, integrity, social responsibility, accountability and fairness. Banks have to make
choices in gray areas of ethics and under high levels of pressure that may damage reputation and
may cause financial loss (Carse, 1999; Souter et al, 1994).

2.1.1. Banking
According Horace White a bank is defined as “a manufacture of credit and a machine for
facilitating exchange.” A bank study in banking defines bank as: “Bank is a lawful organization,
which accepts deposits that can be withdrawn on demand. It also lends money to individuals and
business houses that need it.”

2.2. Overview of the study

2.2.1. History of Bunna International Bank

Bunna International Bank is a privately owned commercial company established in October 10,
2009. The head quartered Addis Ababa, 4killo. The Bank is emerging private Bank in Ethiopia, it
has over 11000 shareholders. It operates through a network of 190 branches, nine dedicated
Forex Bureaus, 50 ATMs and 22 plus Point-of-Sale (POS) terminals spread across the length and
breadth of the nation. It has established correspondent banking relationship with 464 banks
covering 71countries and 175 cities across the world. It has more than 1,600 employees. The
Bank works in partnership with prominent money transfer operators like Western Union, Money
Gram, Express Money, Dahabshiil, Transfast, Ria, World remit & Kaah.

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2.3. Definition

2.3.1. What is Ethics?

The word ethics is derived from the Greek word ‘ethos’, which means character. Ethics is a
branch of philosophy that is concerned with human character & conduct. It is a discipline dealing
with that which is good & bad with moral duty & obligation. Ethics is the embodiment of moral
values, which describes, what is right & what is wrong in human behavior & what ought to be.
Thus ethics refers to good character & morality and to generally accept human character &
behavior considered as desirable by contemporary society. The same action or practice is viewed
as ethical or unethical depending upon the school of moral thought to which one subscribes”.
Amith Menezes (2016)

The terms “moral” and “ethical” are often used interchangeably in society, but there is key
distinction between the two concepts. “Morality is concerned with an individual's personal belief
system, whereas ethics are more so comprised of society's expectations of acceptable behavior.
Norms of acceptable ethical behavior are naturally formed in social environments including work
situations. In these certain environments, individuals tend to adhere to these set standards of
conduct and act in a similar way to their surrounding population. At work, employees also act in
a similar way to their coworkers. New employees tend to act in the way that the other veteran
employees deem as normal” (Jacqueline Karen Kott, 2012). ICSI (2014) in its professional
program paper has out lined that Ethics has the following six important features:

1. Ethics is a conception of right or wrong conduct. Ethics tells us when our behavior is moral
and when it is immoral.

2. Ethics relates to the formalized principles derived from social values.

3. Ethical principles are universal in nature. They are important not only in business and politics
but in every human Endeavour.

4. There exist no sharp boundaries between ethical and non-ethical. Therefore, people often face
ethical dilemmas wherein a clear cut choice becomes very difficult.

5. The concepts of equity and justice are implicit in ethics. Fair and equitable treatment to all is
its primary aim.

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6. Ethics and legality of action do not necessarily coincide. The legality of actions and decisions
does not necessarily make them ethical.

2.3.2. Profession and Professional?

Profession and Professional According to Ali (2005), professional ethics are the moral standards,
principles and regulations that guide the course of professional behavior. Professional ethics are
both individual and institutional in nature and it can be learned during the course of study of the
profession. Professional ethics also rely upon one’s own personal sense of moral behavior and
judgment. It goes on to state that a professional strives to exceed the level of excellence required
by law or commercial interests. Business professionalism isn't just about making money and
impressing people. It also involves fundamental values of integrity, commitment and respect for
oneself and the wider community. Idolohor (2010) points out that Professional ethics are the
moral standards, principles, and regulations that guide the course of professional behavior.
Professional ethics are both individual and institutional in nature.

According to Sanusi (2003), the professional character has at least two components which are to
master and practice the expertise of the profession to the highest level of competence the
individual can manage. The external standards require minimum or adequate competence. The
internal standards of a professional aspire to the highest possible level of competence. And a
commitment to use these high levels of competence to serve others. In the first instance, the duty
of service runs to the client, but it can run to fellow professionals, to others who stand in some
relationship to the client. McDowell (2000) further points out that one can aspire to professional
status, but achieving it depends on acceptance and admittance by others. This social acceptance
proceeds through a series of steps which includes, being admitted to a professional school,
passing the courses, which signifies that adequate competence in various “types and levels” of
technical expertise has been attained, passing the state certification examination. Being licensed,
and locating or establishing a position of employment or service within the profession.

2.3.3. What Are Workplace Ethics?

According to Heather Hunt (2012), workplace ethics are “standards of acceptable behavior on the
job.” Ethics are “a set of rules by which to judge decisions and conduct in the workplace”.
Ethical conduct on the job requires “knowing what is right and wrong according to the
established standards and consistently doing what the organization’s ethics policy requires.

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Workplace ethics involves making honest and upstanding choices. Doing what is ethically right
is often confused with what is easiest, quickest, or cheapest. Many business people in recent
years have crossed the line for personal profit or because of misguided notions of organizational
loyalty.” Ethics involve employees at all level of the organization. A firm that understands and is
guided by ethical conduct on the job provides everyone in the organization with the same “moral
compass” to follow in times of uncertainty, crisis, and competition.

2.4. Theoretical literature review

2.4.1. Views on banking ethics

In general approach, ethics is the study of morality, which examines the significance and
objectives and establishes moral norms moral evaluation criteria. Key terms include ethical
morality, kindness, conscientiousness, evil, freedom, happiness, love and virtue (Božović, 2007).
Banking ethics is a particular form of economic ethics, is the body of rules and moral norms
covering the conduct of banking employees (business banking), both individually and
collectively. Banking ethics rules, being highlighted as a separate class, have long evolved with
the development of financial activities, which in time became banking.

Many experts believe that the banking ethics is a form of professional ethics in the field of
finance, which exists along with the universal principles of morality and is characterized by
specific norms of human behavior in its specific activity.

The banking ethics are two levels of manifestation:

• Corporate banking ethics, that is, a set of ethical standards of conduct of the bank as a legal
entity;

• Bank etiquette - rules of conduct bank employee.

Depending on the scope can be distinguished two forms of banking ethics: internal and external.

Internal banking ethics contains rules of conduct between bank managers, shareholders and
employees. This type of ethics is designed to create a favorable psychological climate and
cultivation of the spirit of cooperation in the banks, avoiding and resolving internal conflicts and
prevent domestic bank fraud.

External banking ethics governs the conduct of bank managers and employees with business
representatives of the bank. It meant to create a positive image of banking institutions, fostering

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collaboration, avoidance and resolution of external conflicts of banks . (Annals economics, 14(1)
2014,

Companies do have ethical responsibility and are not protected by limited liability from the
consequences of their actions. A company's record and the perception of its ethics affect its
reputation and ensure long term success or failure. The financial community has a history of
placing moral considerations above legal or opportunistic expedients. But we are often exposed
to moral dangers and the dangers of contamination are increasing. Deregulation and the
technological revolution are sharpening ethical conflicts. Bankers' role is one of stewardship
based on trust (Valentina Fetiniuc, Ivan Luchian (2014)

2.4.2. The Basic Ethical Principles in Banking

 Principle of Mutual Trust is of special importance for successful functioning of the
business system. Important and valuable deals are very often contracted over the phone,
in the absence of witnesses, while the relationship between the participants is dominated
by the inviolable principle of mutual trust.
 Principle of Mutual Benefit and Interest means that none of the partners in a business
relationship should feel cheated;
 Principle of Good Intentions is very important for business ethics and moral behavior.
This principle means that there is no intention to treat the business partner in an immoral
way, whether it refers to deception, theft or some other undesirable way of treating a
business partner;
 Principle of Business Compromise and Business Tolerance refers to the harmonization of
the conflicting interests of participants in the business process;

 Principle of ethical improvement of business behavior represents the business partner's

readiness to accept the mistake that has been made as a result of his own actions. He
should admit the mistakes and respond in an appropriate way;
 Principle of DE monopolization of One's Own Position, because monopolistic behavior
on the market does not contain any ethical market value;
 Principle of Conflict between One's Own Interests refers to the inability to relate common
to personal interests, with simultaneous adherence to the same ethical values. Amith
Menezes(2016)

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2.4.3. Professionalism in ethics
According to Yidawi (2005), Professional ethics are the moral standards, principles and
regulations that guide the course of professional behavior. Some examples of professions with
established professional ethics include law, medicine, banking, teaching, and advertisers.
Professional ethics are both individual and institutional in nature. Professional ethics can be
learned during the course of study of the profession. Professional ethics also rely upon one’s own
personal sense of moral behavior, applying their skills and making judgment. It is essential that
professionals continue to evaluate and learn about ethical issues in their respective fields
consistently, as professional ethics change in light of new technologies. Professional ethics is the
norms required by the moral point of view for the kind of work that professionals do, that is, an
ideal rational ethic. It means the second common norms actually followed by most professionals.
An ethic exists to the extent that professions regard such practices as morally obligatory. It is also
a common element of codes of professional associations. Many such codes exist, but they do not
always conform either to rational norms or actual practices. McDowell (1991) pointed out that
one can aspire to professional status, but achieving it depends on acceptance and admittance by
others. He further indicated that to qualify as a professional, there must be an internal dimension
of acquiring the character of a professional, as a matter of individual choice and commitment. In
other words, professional ethics isn’t just about the acquisition of certificates but also about
practicing the moral aspect of professionalism.

2.4.4. Written Code of Ethics

In almost all Department offices and branch gates of Bunna international Bank, there are
billboards showing the Vision and Mission statements of the Bank. The Bank publishes its values
on its book of agenda which is mainly for customer purpose but the Bank has no well written
code of ethics that link employees with standards of professional conduct. By code of Ethics we
are referring to “the principles and expectations governing the behavior of individuals and
organization in the conduct of internal auditing, It describes the minimum requirements for
conduct, and behavioral expectations rather than specific activities" (www.globalethics.org).

According to ICSI (2003), code of Ethics is a “corporate code of conduct that helps its members
to promote high standards of ethics and practice. It makes them aware of ethical dilemmas and

11
by adhering to these code of conduct, business people can observe elevated standards of conduct
and personal integrity so as to win the trust and confidence of the stakeholders. It should reflect
top managements’ desire for compliance with the values, rules, and policies that support an
ethical climate. The development of a code of ethics should involve the board of directors,
president and chief executive officers who will be presenting the code. Legal staff should also be
called on to ensure that the code has assessed key areas of risk correctly and that it provides
buffers for potential legal problems.” The document further outlines “corporate code of ethics
often contains six core values or principles in addition to more detailed descriptions and
examples of appropriate conduct. The six values that are desirable for codes of ethics include:

(1) Trustworthiness,

(2) Respect,

(3) Responsibility,

(4) Fairness,

(5) Caring, and

(6) Citizenship.

Schuler (1996) relates issues of ethical standards to Human Resource Management (HRM).
Schuler recommends that clear policy statements spell out the type of behavior that is ethical and
unethical. Richards (1998) strengthen Schuler's recommendation by stating “companies need to
have a clear code of ethics document”.

In his article “Put it in writing: Your business has ethics” Jeff Wuorio (2013) underlines among
others ethics codes should be “posted internally” and there should be a reporting system. The
article further emphasizes further to having written code of ethics, we must have someone to
follow-up and enforce it.

2.4.5. Professional codes of ethics

Baker (1999) reported that Thomas Percival (1740-1804) of Manchester, England first proposed
code of ethics for Physicians and Surgeons in 1794. This was enlarged in 1803 using such
expressions as professional ethics and medical ethics. This proposal coincided with a code of
medical ethics in America such as the Boston Medical Society code of 1808. Since then, codes

12
have gradually displaced the ethics of honor. Today, a formal code of ethics is the hallmark of
professionalism for professionals everywhere.

According to Yiwadi (2005), Codes of ethics are sometimes seen as controversial documents.
Most Codes of Ethics in the banking industry worldwide try to cover important and fundamental
aspects of principles and professionalism for their members. The Irish Bankers’ Federation (IBF)
has general principles as integrity, confidentiality, professionalism and compliance. The Code of
Ethics of the Australian Institute of Banking & Finance (AIBF) touches on abiding by the law,
integrity of records, free competition, misappropriations, conflict of interest, customer privacy
and employer information, insider information, improper payments, gifts, entertainment and
social responsibility. Meanwhile, the Code of Ethics and Professionalism in the Banking and
Finance Industry in Ethiopia on the other hand cover areas like conflict of interests, abuse of
trust/office, full disclosure, misuse of information, insider abuse, offer and acceptance of
gratification, non-conformity with standards and guidelines, association with doubtful persons,
and aiding and abetting improper employment. All these areas oppose the poor banking practices
in Ethiopia and attempt to solve these problems which can only be achieved when they are put
into practice.

The Ethics Resource Centre (2003) has pointed out that codes of ethics should not only be
developed but its development must just be the beginning of a general procedure of meeting the
needs for the effectual communication of organizational ethics benchmark. The objectives
include: ensuring that every employee receives a copy of, or has ready access to, the code; that
every employee understands a personal responsibility to abide by the provisions and standards
laid out in the code; that the organization’s commitment to the code is unambiguous and clear to
every employee; and that employees are exposed to abundant examples of the code’s utility, and
how common questions about its intent and application have been resolved. Furthermore, the
development of this code has the additional merit of being preceded by serious discussions,
which, in turn, improve understanding and commitment to the principles that have been agreed.
The codification of ethical practices was necessary to bring about ethical awareness amongst
Ethiopian bankers as well as provide guidance in cases of complex situations. This will also
assist in redeeming the image of Ethiopian bankers, which has been badly battered in the public
opinion.
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Mount (1990) and Kultgen (1988) have said that the apparent function of codes is moral, and that
the codes should be simple and reasonable to a wide audience. This is because codes are
instruments for persuasion both of members of the profession and the public. It should enhance
the sense of communion among members, of belonging to a group with common values and
common mission. Francis (2000) also advised that codes of ethics might be distributed through
company booklets, annual reports and induction, and training programs.

According to McDowell (1991) ethical codes enable definition of the limits of what constitutes
acceptable or unacceptable behavior, and provide a mechanism for communicating professional
ethics policy. Nowell-Smith (1954) pointed out that “it is enough to have known the general,
unchanging rules; we must also have known how to apply them and it is this reason that moral
rules, like the law, cannot be codified at all.

2.5. The Concept of Bank Ethics and Professionalism

Ethics can be referred to well-founded standards of right and wrong that prescribe what humans
ought to do, usually in terms of rights, obligations, benefits to society, fairness, or specific
virtues. Ethics, for example, refers to those standards that impose the reasonable obligations to
refrain from stealing and fraud. Ethical standards also include those that enjoin virtues of
honesty, compassion, and loyalty, as well as, standards relating to rights, such as the right to life,
the right to freedom from injury, and the right to privacy (Aron, 2005). Ethics can also refer to
the study and development of one’s ethical standards. As mentioned above, feelings, laws, and
social norms can deviate from what is ethical. So, it is necessary to constantly examine one’s
standards to ensure that they are reasonable and well-founded. Ethics also means the continuous
effort of studying our own moral beliefs and our moral conduct, and striving to ensure that we,
and the institutions we help to shape, live up to standards that are reasonable and solidly-based
(Aron, 2005). According to Aron (2006), ethical code is adopted by an organization or company
like a bank to set out general principles about the organization’s belief on matters such as quality,
privacy, mission or the environment. The ethical issue involved here is concerned with principles
and values that are imbedded, either implicitly or explicitly to guide behavior of bankers. The
issue of code of ethics and professionalism is of great importance to bankers and the general
public.

14
Considering the requirements of banks for protection of the rights and interests of innumerable
depositors, establishment of stability and confidence in financial markets and economic
development, it is very paramount for banks to also ethically pursue their operations in
compliance with the principles of integrity, impartiality, reliability, transparency, social
responsibility and controlling of money laundering (Carse, 1999). These concepts have been
variously defined to fit the situations of various professions under consideration. However,
efforts are made in this study to narrow down the various definitions to banking sector. “Ethics is
often referred to standards of conduct, standards that indicate how one should behave on moral
duties and virtues, which themselves are derived from principles of right and wrong. According
to Baker (1999), Codes of Ethics in the banking industry worldwide cover important and
fundamental aspects of principles and professionalism for their member. A formal code of ethics
is the hallmark of professionalism everywhere. Also, Professionalism from professional ethics is
the moral standards, principles and regulations that guide the course of professional behavior.

2.5.1. Why to study Ethics

Cleveland (1997) wrote the important roles (1994) writes, "We must recognize the impact and
importance of unethical behavior to destroy public respect "We must work to ensure that our
organization has code will provide member with a clear understanding of what is right and
wrong."

(ICSI, 2003) writes "Ethics is necessary and important in business social contract between the
society and business by which the society expects the business to work in its interest". ICSI has
mentioned some ethical issues in finance like; reimbursements, insider trading, misleading
financial analysis etc. explained," that ethics involve more than oneself, ethics is about how the
res affect the consumer and provider equally. Ethics has a great deal to do with the overall total
quality of an organization".

There are ethical issues commonly faced by HRM that we have to know and deal with as
mentioned by ICSI. These include; “discrimination issues, i.e., discrimination on the bases of
age, gender, race, religion, disabilities etc., sexual harassment, affirmative Action, issues
surrounding the representation of employees and the democratization of the workplace and trade
unionization, Issues affecting the privacy of the employee: workplace surveillance, drug testing,

15
etc., discrimination of whistle-blowers, Issues relating to the fairness of the employment contract
and the balance of power between the employer and employee, occupational safety and health
issues” etc.

2.5.2 Ethics Programs

ICSI in its professional program paper outlines that "a company must have an effective ethics
program to ensure that all employees understand organizational values and comply with the
policies and codes of conduct that create its ethical climate". According to ICSI two types of
ethics program can be created and they can be adopted simultaneously. These are;

• Compliance Orientation Program: A compliance orientation creates order by requiring

that employees comply with and commit to the required conduct. It uses legal terms,
statutes, and contracts that teach employees the rules and penalties for non-compliance.
• Values Orientation: Values Orientation strives to develop shared values. Although
penalties are attached, the focus is more on an abstract core of ideals such as respect and
responsibility.

Instead of relying on coercion, the company’s values are seen as something to which people
willingly aspire. Frank Navran (1997) outlined 12 best elements of ethics program they are:
Vision Statement, Value statements, organizational code of ethics, ethics officer, ethics committee, ethics
communication strategy, ethics training, ethics helpline, measurement and rewards, monitoring and
tracking system, periodic evaluation and ethical leadership . According to Frank these practices can
ensure that an “organization is doing nothing to encourage good people to do bad things.” "A
major step in developing an effective ethics program would be to implement a training program
and communication system to train educate and communicate employees about the firm’s ethical
standards" (ICSI, 2003).

Other researchers consider the principles and orientation guiding a corporate ethics program.
Jackson (1997) focuses on global corporate ethics programs and using corporate examples and
lessons learned suggests six guiding principles for creating a global ethics plan: Create a
cosmopolitan ethical culture, use the ethics program to treat managerial causes of misconduct,
internationalize the code as appropriate to the industry, seek new ways to communicate the code,
focus on the host’s laws/customs and human rights, accept an opponents’ reasonable position on

16
controversial issues, and encourage “spirit of the law.” Weaver and Trevino (1999) divide ethics
programs into two orientations: compliance-oriented (i.e. emphasizing control/discipline) and
values-oriented (i.e. emphasizing values/counseling).

2.6. Empirical Studies on Ethical Behavior

In their research paper under the title “Ethical Behavior in Organizations: A Literature review,
Marmat Geeta, Jain Pooja and Mishra PN) (2016) have stated that “Ethical behavior has become
rampant remedy to be succeeded in business by pretending that it has unique characteristic.”
After reviewing available literatures on ethical behavior, they have categorized them into
“individual, organizational and external factors”. According to the paper, individual factor is the
most important in behavior and “can be taken as unit of any ethical decision making”.

While “organizational factors are the factors which are external to the individual and exist in the
work environment of the individual and directly or indirectly influence individual in their ethical
behavior.” Among them are “code of ethics, ethics training, rewarding system, climate, structure
etc.” are very important ones. Factors like “competition, influence of stakeholders and regulation
system” are mentioned as external to the individual and the organization because individuals and
organization have no control over these factors.

2.6.1. Ethics Training

Training in ethics “seeks to help people understand the ethical aspects of decision making and to
incorporate high ethical standards into their daily behavior.” In a study conducted in U.K,
employees were asked whether they had been aware of actual misconduct by their employer or
colleagues. Only 20% of full-time employees answered “Yes” to this question (NBE, 2012)
suggesting the need to clear guidance and awareness creation.

As explained by Heather Hunt (2012), “many organizations train their supervisors and managers
on employee ethics. While it is imperative for those individuals to have a thorough understanding
of ethics policies and codes of conduct, training for all employees will increase the likelihood
that the policy and code are followed company wide. Employees need the benefit of ethical
training so that they, too, can meet the standards set by the organization’s policies and codes of
conduct. Here are several more business and professional reasons why company-wide training on
ethics enhances your organization’s culture and bottom line.”

17
On the other hand ICSI (2003) writes "If ethics training is to be effective, it must start with a
foundation, a code of ethics, and a procedure for airing ethical concerns, line and staff
involvements, and executive priorities on ethics that are communicated to employees".

2.6.2. Ethical Leadership

“For a high-quality leadership, it is imperative that leaders should be strong enough in their
ethical behavior in day-to-day business matters” (Ciulla, 1995, Kodish 2006). According to
Aristotle, leadership is above the skills, above the awareness of assumptions, and beyond the
diagnostic ability. “It is the aptitude of the followers to handle the situation ethically and
productively depending upon their knowledge, skills, expertise, experience, sensitivity, and
insight vision. So, leadership is the perception of the world with a broader visionary fertility of
mind.” Bass and Steidlmeier (1999) adopt this explanation and say that, the leaders may or may
not be strong enough in their decision making power. They suggest that this “decision making
power can make them affective or ineffective. Besides this, ethical leaders have strong ethical
norms and values, supportive character for themselves and others, which are intensely
surrounded by a broad vision.”

Ladkin (2008) considers that leading skillfully has three dominant attributes; “visionary” in
recognizing them self and the situations, “consistency” similarity among himself and other's
ideas and communication, and “rationality” achievement of goals. Ladkin (2008) finds out that
leading skillfully “engages in recreation of the ethical aspects of a leader's efforts” and point outs
whether the leader's purpose fits with the full awareness of the human atmosphere.

Kanungo (2001) mentions that “ethical leader's behavior is sometime connected with the welfare
of the others and in the meanwhile, they engage in acts and behaviors that benefit others and at
the same time, their behavior can be the source of any spoil to others.” The researchers of
leadership normally sketch features and distinctiveness that relate to “good quality leadership”.

“The major distinguishing feature of ethical leadership is its stress on characterized moral
perception, moral judgment, moral management, and moral impression” (Brown and Trevino,
2006; Walumbwa et al., 2008). “Ethical leadership is mostly related with self-actualization,
moral relationship, moral perception, and unbiased dealing” (Gardner et al., 2005; Walumbwa et
al., 2008).

18
2.6.3. Ethics and Employee Performance
Employee performance is very important element for the success of any organization. But
organizations’ destiny can‘t be decided by the performance of one or two employees. The
organization's performance is the shared and sum total effort of all of its employees.
“Performance is the key multi character factor intended to attain outcomes which has a major
connection with planned objectives of the organization” (Mwita. 2000). The leaders and the
employees of an organization are all expected to perform to the maximum of their capabilities to
achieve organizational goals and objectives.

The organizations have also some expectations from their leaders and employees. So, in many
situations the employees try to fulfill these expectations, but in some cases, they are dependent
on their bosses or the management for proper guideline. Therefore, “employees must be trained
so well to show performance by accomplishing their tasks and responsibilities artistically.” “An
efficient leadership plan can be a strong weapon for support to assist in discovering and polishing
leadership characteristics between the employees of the organization.”

Studies have shown that ethics affect employee performance in various ways. General Electric
Engineers conducted survey on a factory and divided the factory into two groups (Hawthorne
Studies). One group was given good working environment and monetary benefits and the other
group was denied the two things but was given their favorite to work with. It was finally noted
that workers who were given work with their favorites were happier and satisfied than those who
were just given salary and good working environment. So the conclusion follows that a worker
likes to be respected and give respect to co-workers, management and customer of the
organization.

“Although money is an important stimulant for work, if the worker is not given respect and honor
he/she would leave the job and reject monetary incentives. In work place if workers get a feeling
of discrimination they lose interest in jobs. Absenteeism rises and worker do not come up to the
expectations of the company. They reflect their dissatisfaction on co-workers and customers and
thereby affecting company's performance.” According to Grant and Hoover (1994), "Ethics are
closely tied to culture of an area, and as culture differs from place to place, ethics may also
differ". This would also be true for banking services. Even ethics of one

19
Department may differ from that of the other. Employees deserve to work in an environment that
makes them feel comfortable and productive. Just like other duties, employee must know what is
expected of them in relation to conduct and ethics. "Department leaders also must create an
environment that makes it possible for Department members to bring their mistakes out in the
open instead of trying to hide them" (Marinucci, 1992).

A company can't expect employees to maintain a high level of ethical behavior if they have no
clear guidelines to be guided by. "Having a written policy helps to create this atmosphere and
makes members aware of the kinds of behaviors expected of them in specific situations, the
repercussions that can occur when they do not meet the expectations and the manner in which the
Department will handle infractions". (Marinucci, 1992).According to Steffens, we must
recognize the impact & importance of ethics and the potential for un-ethical behavior to destroy
any public respect that the profession may still have. He stressed we must work to ensure that our
organization has a clear and written ethical code which will give employees a clear
understanding of what is right or wrong(Steffens, 1994).

In a study conducted on 100 successful corporation in USA, it was found that each companies
had a written code of ethics and it was made understood by all employees and was an integral
part of each company's corporate culture (Business Roundtable 1988). Another research
conducted by Shea (1988) has also shown that a consistent pattern of ethical conduct among
managers and within the organization helps solve many problems and contributes to high
performance.

Code of ethics would provide important tools that employees could use to make right decisions
and the concept Total Quality Management (TQM) is all about making the right decisions and
satisfying customers. "Ethics involve more than one self. Ethics is about how the results of our
decision affect the customer and the service provider equally. Ethics has a great deal to do the
overall total quality of an organization (Dr. George Thomas, 2003).

Some of our organizations both public and private duplicate written codes from different
countries. It is also common to see organizations of varying nature use similar code of ethics. But
according to Grant and Hoover (1994), "Ethics are closely tied to culture of an area and as
culture differs from place to place, ethics may also differ.

20
Strong ethical culture improves employee behavior. Getting employees' ideas and getting their
involvement is not an option anymore. If our workforce is going to be competitive, it's
mandatory to involve the minds, hands, and ideas from everyone in the organization.” This is
particularly true with the Banking business of today. “A strong ethics program can bring in many
concrete benefits for an organization, from increasing customer satisfaction, to improving
employee morale, to conserving resources and saving costs.

2.6.4. Application of Ethics to Banks’ staff

Conceptually a Bank is known as a financial institution, which serves as a financial intermediary
among various components of our society. As was shown in the previous sections of this paper,
the primary task of a Bank is to accept deposits and provide credits either by lending or through
capital market. “A Bank is a financial establishment which uses money deposited by customers
for investment, pays it out when required, makes loans at interest” – Oxford Dictionary (2008).
On the basis of the definitions given at various sections of the paper, Bank is an institution which
deals with money. Each Bank performs various functions like money lending, accepting deposits,
transferring of money, facilitation of import export business, e-payment, management of foreign
exchange etc.

All those activities are closely related to the confidence of the public, which is to a great extent
driven by the degree of responsibility with which Banks’ management and employees treat
clients, the competition and cooperate with one another. Green (1989) revealed that a “Bank's
responsibility extends to Government, customers, shareholders, staff, and the community.
Companies do have ethical responsibility, but it is not protected by limited liability from the
consequences of their actions. A company's record and the perception of its ethics affect its
reputation and ensure long-term success or failure.” Further, he concluded that as we face
increasingly complex and conflicting issues, our commitment to ethical behavior would be
tested.

"The fact that Banks, as organizations which fulfill investment and saving functions by playing
an integrating and intermediary role between the fund-supplying and fund-demanding parties of
the society, have also adopted profitability and productivity principles, obliges them to stick to
ethical principles during their operations in both professional and corporate domains. If we want
to realize our general objectives of growing our banking system, raising the banks’ service

21
quality, using the resources most appropriately, and preventing unfair competition between
banks; we have to formulate and regulate the relations of the banks with each other and with
other organizations as well as their relations with their customers, shareholders and employees in
line with ethical principles". (The Banks Association of Turkey, 2010)

“The image and reputation of a Bank as well as people’s confidence in the bank depend heavily
on the behavior of its employees, their ability to interact with and show attention to their
coworkers and clients.” The Human Resources Policy of Bunna International Bank contains
many tips and requirements for the staff. An employee must seek the right decision both for the
client and the bank, and try not to make irresponsible promises that may not be fulfilled.
“Interaction while maintaining eye-contact with the person you are talking to is a very important
principle of social behavior.” "Probably the most important thing that is missing in interaction is
the ability to listen, defer challenging another person’s opinion, try finding positive aspects, look
for a compromise, see and appraise both what is good and bad. One way to develop
communication skills is to attend special training courses at banks.

The exterior image of the employee – the way they are dressed, how tidy their workplace is – is
very important. The management of the banks that hold licenses issued by the Bank of Lithuania
and a foreign bank branch have been surveyed anonymously, without disclosing the names of the
banks in this paper, about their priorities for the existing employees and new staff members to be
recruited.

They were asked to rank (on a 100-point scale) the following qualities of employees pertaining to
ethics: professionalism and competences; honesty and thoroughness; transparency and accuracy
while maintaining bank secrecy; possession of views and criticism; ability to communicate,
conflict avoidance; fairness very much similar" ( Filomena Jasevičienė, 2012). “What does Code
of Ethics mean to Bank of America? It means that individually we each uphold a commitment to
our company’s Core Values as guides for our daily conduct; and as a team we act with a shared
ethical responsibility to always do the right thing.” (Ric Struthers, President, Global Card
Services, 2014).

2.6.5. Why Ethics and Professionalism in Banking?

According to The Chartered Institute of Bankers- Ghana (CIBG, 2006; 2013), the collapse of
banks and the grinding to a halt of economic systems had been attributed partly to the

22
deterioration of human basic values, notably integrity, honesty and loyalty. The need for ethics in
banking stems from the critical importance of banking to the economy. Banking is essentially a
service business of intermediation. Of necessity banks mobilize funds from the public at large to
perform this role. Consequently, banking is built on trust and confidence which can be easily
eroded by unethical practices and it is for this reason that banking is the most regulated industry
in the economy, be it market or command economy. Every bank derives its ethical values from a
combination of corporate and professional ethics. While corporate ethics are derived from
organization’s own values and culture (i.e. standard banking industry practice), professional or
occupational ethics are for members (individual or corporate). Bankers are expected to exhibit
integrity, accountability and transparency in conducting banking business. The consequence of
non-compliance would only bring the profession into disrepute.

The Chartered Institute of Bankers (2006; 2013) Code of Banking Practice had long recognized
the need to uphold integrity of the Banking Profession. Ethical behavior is concerned with the
respect and promotion of the interests of all involved in any interpersonal interaction and ethical
behavior revolves round three elements (i) The good, (ii) The persons (self) and (iii) The others).
The objectives of the code are to: i) prevent the development of unethical practices within the
banking profession (ii) harmonize the concepts of social responsibility and (iii) promote honor
and integrity in banking professional practice (CIBG, 2006; 2013) The Institute of Bankers code
of business conduct covers the areas of conflict of interest, insider trading, money laundering,
soliciting gifts, and corruption. A conflict of interest has been explained whenever members
place themselves in a position where their personal interests or duties to other persons are liable
to conflict with their duties to the bank. Insider information has also been referred to as material
non-public information that may have either negative or positive impact on business or personal
decisions. Money laundering is concealing the transformation of profits from illegal activities
and corruption into ostensibly “legitimate asset”. Corruption is the abuse of office for private
gains. It encompasses; patronage, nepotism, theft of corporate assets including the stealing of
corporate revenue. Corruption is also seen as wrong doing by those in special position of trust. It
also applies to self-benefitting conduct by board of directors, bank executive teams and other
staff who render services to clients or customers (CIBG, 2006; 2013).

In pursuance of its mandate, the CIBG (2006; 2013) issued a code of Banking Practice which
sought to promote professionalism and high ethical standards in the conduct of banking business.

23
The highlights of the Code include:

• Banks and bankers will operate within the legal framework.

• Banks and bankers will follow the best professional practice in the global industry.  Banks
will always place their depositors’ interest before all others.

• Banks will always meet their commitments. Such commitments will not be lightly given and
should never be broken.

• Banks will repay depositors at maturity on the agreed terms.

• Banks will meet their trade engagements.

• Banks will meet delivery on their trading contracts at maturity at agreed rates.

• Banks will always lend on agreed terms.

• Banks will deal only with respectable parties. They will take all reasonable steps to establish
that all parties they deal with are bona-fide. Individual bankers should not ask for, nor even
accept, any form of gratification, either in cash or in kind, for performing their normal services.

• Banks should not pay brokerage to members of their staff.

• Banks and employees will follow only the best professional practice in their recruitment and
employment policies.

• Banks should not undermine other banks’ stability in the process of marketing so that
competition is healthy. Undoubtedly, the above Code emphasizes compliance with applicable
banking laws, professionalism, honoring of commitments, fairness to customers and healthy
competition.

2.6.6. Unethical Practices/Unprofessional Conduct in Banks

According to the Regulatory Laws on Code of Ethics in Banking and Finance Industry dated26th
November, 2012 and the Code of Banking Practice published in May, 2004 by Australian
Banker’s Association [ABA], there are a lot of immoral and unethical practices in the banking
industry, which is not peculiar to Ethiopia banking industry alone, and as such conducts are
classified unprofessional and unethical including, but not limited to the following issues. The
issue of conflicts of Interests, involving engaging in extraneous activities which compete with or
constrain a bank’s primary responsibility; abuse of trust/office, involving abuse of position and

24
taking advantage of the institution to enrich oneself, and the like. Also, lack of full disclosure
such as, non-disclosure to relevant authorities in dealing with other players and customers in the
market place; underestimating the volume of deposits in order to evade insurance premium, and
the sidelining of vital prudential guidelines. There is also the issue of misuse of Information,
(manipulation or non-disclosure of material information on reports supplied to Regulatory
Authorities, in order to derive some benefit or avoid liability, etc.). There is insider abuse
syndrome (meeting re-capitalization requirement other than by actual injection of fresh/genuine
funds, improper granting of loans to directors, insiders and political interests, insiders’
conversion of bank’s resources to purposes other than business interest, granting of unsecured
credit facilities to directors in contravention of the provisions of Banks and Other Financial
Institutions Act (BOFIA, 1991), granting of interest waivers on non-performing insider credit
without CBN’s prior approval as required by BOFIA, 1991, diversion of Bank earnings Through
the use of subsidiaries or “secret accounts” to deny the bank of legitimate earnings]. Another is
offer and acceptance of gratification to/by the regulator as an inducement to waive the imposition
of penalties arising from failure to comply with laws or regulations, applying uneven
standards/imposing unfair penalties by the regulator with the intention to induce gratification,
offering/acceptance of gratification to/from customers and potential customers to do business,
and aiding a customer to evade Tariffs and Taxes and to make unwarranted earnings (Code of
Ethics In Banking And Finance).

2.6.7. What Bunna International Bank Documents says about Ethics

In its corporate mission statement, the Bank signifies its intent of “providing efficient and
customer focused domestics and international banking services”. In the core values of the Bank
and statements included in the Human Resource Manual as a ‘code of ethics’, some important
element of ethics like confidentiality, honesty, reliability, password related issues etc. are
mentioned with corresponding penalties for failure to obey them. Issues like prudent lending, fair
allocation of foreign currency to customers, the consequence of involving in activities like taking
bribes, exaggerating value of building on engineering estimation for personal gain purpose are all
strictly prohibited and are documented in the form of Policy and Procedure Manual to be used by
the corresponding work units of the Bank.

25
 2.7. Conceptual Framework

This conceptual model is used as a means of discussing the practice and problems in professional
integrity and ethics in the bank in the case of Bunna International bank. The conceptual
framework is used in creation of the theoretical and empirical research, survey and
questionnaires that has been conducted in the study, and also it is used in discussion of the results
of the survey and the interviews. This model has also provide a means of analyzing the outcomes
in terms of the existing literature and comparison of the findings to what have been identified as
the most important practice in conduct of Ethics. The conceptual framework, however, is
descriptive of the expected findings of the research. When evaluating the practice and problems
of professional ethics in Bunna International bank, the researcher took three dependent variables
or components that must be considered as essential tools for the study. Thus, the researcher made
components as: the values and importance of workplace ethics, the manifestations of ethical
behaviors and the major types of unethical practices as one of the major variables of practice and
problems of professional ethics.

Independent variable Dependent variable

Dependent Variable
Major values and importance of workplace
ethics in Buna Banks

PRACTICE AND
The manifestations of ethical behaviors
in PROBLEMS IN
PROFFESSIONAL
Buna Banks. INTEGRITY AND
ETHICS IN BUNNA
BANK

The majortypes of unethical practices

26
Fig 2.1.Conceptual framework

CHAPTER THREE

3. RESEARCH DESIGN AND METHODOLGY

3.1. Introduction
This chapter describes the research study design and process, the data collection methods and the data
analysis techniques. Research designs are procedures for collecting, analyzing, and reporting research
in quantitative and qualitative research (Creswell, 2012). The research will be used triangulation that
combines both qualitative and quantitative methods to achieve research objectives. According to
Creswell, research methodology refers to the procedural framework within which the research is
conducted. Hence, it refers not only the research methods but also consider the logic behind the
methods the researcher uses in the context of his research conduct and explains why he is using a
particular method or technique and why he is not using others so that research results are capable of
being evaluated either by the researcher himself or by others (Creswell, 2012).

Under this section issues related to the research design, the sources of data and collection
methods, the sampling technique, data analysis and ways of disseminating the result will be
addressed.

27
3.2 Research Design

Research design is described as a plan, structure of investigation conceived so as to obtain

answers to research questions. (Dev.vos, 2002) However this research work is descriptive type of
research intends to show the practice and problems of professional integrity and ethics in private
bank: in the case of BIB.

According to Kothari (1985) descriptive research is one of the most widely used method in social
science research. It is used to obtain information concerning the current status of the phenomena
to describe “what exist” with respect to variables identified by the researcher or conditions in a
situation. It also provides the number of times something occurs, frequency, lend itself to
statistical calculations such as the average number of occurrence or central tendency. In other
words, it is mainly deals with the “description of state of affairs as it is at present (Kumar, 2008)
and there is no control over variables in descriptive research.

3.3. Research Approach

Regarding the nature of the research questions that can be address in this study and in order to
achieve the stated objectives, quantitative research approach will be used. Quantitative approach
aspects which focused up on the data with numeric nature will be selected to address the research
objectives that aimed to assess the existing problems.

3.4. Sample Design

According to Kothari (2004) a sample design is a definite plan for obtaining a sample from a
given population. It refers to a technique or the procedure, the research would adopt in selecting
items for the sample. It includes the population the population of the study, sample frame, sample
size and sampling unit for the study area.

3.4.1. Study and target population

“The population is a census of all the elements or subjects of interest and may be finite or
infinite” (Asika, 1991). “The full set of cases from which the sample is taken is called the
population” (Saunders et al: 1997). A research population is generally a large number of
collections of individuals or subjects that is the main focus of a scientific query. This is the total
number of people meeting the criteria to be surveyed from which the target group is selected.
28
Given the matter of interest in this research, our focus is on professionals that meet a certain
criteria. Respondents had to be professionals working on top level working in BIB at the time of
the data collection in order to be considered.

The population in this study comprised of employees working in various positions at the Head
office of BIB. There are 180 Branches having more than 1,300 employees, as per the data
compiled as of January 30 /2019. The entire population is too large to be included in the study. It
is therefore imperative that a sample of the population must be taken for the purpose of this
research. The study and target population are BIB top management officers which are working at
the head office with the total amount of 60 and 50 respectively.

3.4.2. Sampling frame and unit

Sampling frame is a list or a set of directions for identifying all elements in a study population.
(Kothari, 2004). Sampling unit of the study is 50 individuals as shown below.

Table 3.1. List of participant

S.No Participant Number at the head office
1 Executives 1
2 Directors 10
3 Division head managers 13
4 Team leader 3
5 Managers 4
6 Below team leader 7
7 Others (senior inspectors, auditors) 12
Total 50
Source: field survey (2024)

3.4.3. Sample size

According to human resource department of BIB, this study will have a population of size 60
bankers, target population 50 bankers chosen purposely (on own judgment) with special
consideration of their authority and total year of experience in the industry. Out of 50
questionnaires distributed, 40 responses will be received from respondents representing about
85% response rate. This is quite representative and the outcome is a valid representation of
Bunna International Bank.
29
3.5. Sampling method

Sampling techniques provide a range of methods that enables the researcher to reduce the amount
of data the researcher needs to collect by considering only data from a subgroup rather than all
possible cases (Saunders et al: 1997).

On the other hand, purposive (judgmental) sampling technique will be used to select samples of
Ethics Officers for the study. A purposive (judgmental) sample is one that is selected based on
the knowledge of a population and the purpose of the study. In this case, the researcher
handpicks the subjects to be included in the sample based on his judgment of their typicality or
possession of the particular characteristics being sought (Cohen, 2007).

Non probability, Purposive sampling technique will be used to select the key informants who are
the directors, division managers, team leaders, senior auditors and managers. This research
method will be used employed because the targeted senior staffs and head of this department
have access to vital information, experience and professional skills which is relevant for the
study. Due to their position of responsibility they have a better understanding of practice and
problems in professional integrity and ethics in relation to its effectiveness in detecting and
protecting unethical behavior.

Table 3.2. Method of sampling

S. No Respondents Sample procedure Data collection
method
1 Executives
2 Directors Purposive Questionnaire
3 Division head managers Sampling
4 Team leader
5 Managers
6 Below team leader
7 Others (senior inspectors, auditors)
Source: field survey (2024)

3.6 Source of data and the Collection method

In achieving the objectives of the research, the research will be conducted using both primary
and secondary source of data. These data will helpful in reaching on right conclusion about the

30
research idea. So that in order to asses’ information related to this study, the researcher used
mainly primary data.

3.6.1. Primary Source of Data

Primary data is the data that are actually collected by the researcher through different methods. It
is the raw data gathered and analyzed by the researcher in order to get results. Creswell (2012)
refers primary data as the data that is collected specifically for the social research project using a
data collection method that has been chosen by the researcher and using data collection tool.
Questionnaires will be distributed to directors, division managers, team leaders, managers and
other senior officials of Bunna International Bank in person.

3.6.2. Secondary Source of Data

Secondary data refers to facts and figures collected and often already analyzed, by someone other
than the researcher for purposes other than the research at hand. Secondary data is needed in
conducting research as background to support the overall aim of the research. This is also important
in establishing in-depth knowledge in the particular discipline area. Secondary sources come from
different origins, such as government reports, bulletins, company’s annual reports, publications,
journals, books, online data, websites and other internet sources. Similarly, secondary data for this
research originates from literatures including books, Scientific Journals and documents such as
legislations, reports, proceedings, this involves the data collected from Policy and Procedure
Manual and magazines of BIB journals and books. Sources of secondary data have been fully
disclosed in the bibliography.

3.7. Instruments of Data Collection

3.7.1. Questionnaires
The main purpose of a questionnaire is to obtain information that cannot be easily observed or
that is not already available in written or computerized form. Therefore, a questionnaire is a
useful research instrument for collecting survey information, providing structured, often
numerical data, being able to be administered without the presence of the researcher, and often
being comparatively straightforward to analyze (Wilson and McLean 1994).

Two types of questionnaire will be developed for the purpose of this study. The first type
contains questions with alternative answers (closed-ended) which were designed in 5 point Likert
Scale type and multiple-choice types, which the respondent chooses as per the stated instruction
31
on the questionnaire. The second type is open-ended questions in which the respondent can
express his/her personal or subjective opinion, perception, understanding etc., without limit with
respect to the question at hand.

3.8. Data Analysis Method and Interpretation

The main target of data analysis is to summarize the collected and organize them in order to draw
appropriate conclusion from the findings. Since the type of research is descriptive and data
gathering tool is questionnaire. The respondent’s data will be statistically analyzed using
Statistical Package for Social Science SPSS Version 26. As stated in the aforementioned section
the first hand data entered into Ms. Excel and exported to SPSS package.

Data presentation tools like table and charts will be used to ensure easy and quick interpretation
of data. Descriptive statistics will be used to analyze all data gathered in the form of frequencies,
percentage, mean, and standard deviations. Finally, the analysis and interpretation of the data
have leads to conclusions and recommendations.

3.9. Reliability and Validity

One of the broadest, reliability and validity address issues about the quality of the data and
appropriation if the methods used in carrying out the research. Validity address whether a
research explain or measures what you said would be measuring and explaining. Reliability,
address how accurate your research methods and teaching produce data.

Hence, one of avoiding internal validity treats is by summit in same questionnaires to all
subjects. Regarding that internal validity will be avoided by administrating the same treatments
to all the respondents. The reliability of data will be attained through triangulating or cross
checking results from experience of direct concerned department. (Directors, division
managers…) newspapers, reports in the study area. This can ensure the research validity,
reliability and representativeness on the study.

3.10. Ethical Consideration

All ethical considerations respected and applied in any research are also applied in the study. A
letter from the Addis Ababa University will be given to the respondents so as to get their full
consent and confidence. Hence, all the participants in the research will be involved in the study
voluntarily and with their full consent. The researcher notified the respondents that no matter
32
 what kind of response they give, it would be kept confidential, anonymous and respected. They
will be clear to give their genuine and honest response to accomplish the study as desired. The
researcher informed all the participants about the purpose and the objective of the study and
refrain from deceptive practices, giving false responses, or pretentious answers, which would
violate the finding of the research.

4. WORK PLAN AND BUDGET BREAK DOWN

The study will be performing on the following time schedule and respective budget break down.
4.1. Work Plan

Table 2: Time schedule

This study will be accomplished based on the following time schedule with corresponding tasks.

No. Activities Time

Year 2023 Year 2024

Oct Nov Dec Jan Feb Mar Apr May Jun July

1 Advisor Contact

2 Proposal
development

3 Proposal defenses

4 Proposal correction

5 Data collection

33
6 Data entering and
organizing

7 Data analysis

8 First report
submission

9 Second report
submission

10 Final Report
submission and
Thesis presentation

4.2. Budget Break Down

Table 3: Per-diem and transport cost

No Description no of person Per-diem No of day in the field Total prices in ETB

1 Per-Diem 1 500 15 7500
2 Transport 1 30 15 450
Total 7950

Table 4: Stationary cost

No Description Measurement Number Unit cost Total

1 paper Pack 5 500 2500

2 pen Pack 1 20 900

3 notebook Unit 5 400 2000

4 Pencil Unit 5 10 50

5 CD and flash Unit 2 500 1000

6 Proposal Print Unit 200 10 2000

7 Mobile card Unit 5 50 250

34
 Total 8700

Table 5: Cost summary

No Cost Description Total cost in ETB

1 Per-diem cost and transport 7950
2 Stationary cost 8700
3 Total 16650

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professionalism-in-banking

APPENDIX

Appendix-A: Questionnaire to be filled by Bunna International bank employees

Dear Respondent,

My name is …… I am a graduate student at Zemen College of post graduates. I am conducting a

research entitled “PRACTICE AND PROBLEMS IN PROFFESSIONAL INTEGRITY AND ETHICS
IN PRIVATE BANKS: In the case of Bunna International Bank” for my partial fulfillment of the
requirements for the degree of Masters in Business administration. Hence, I am courteously
requesting you to provide me your personal cooperation by filling the questionnaire, which will
take you 15-20 minutes. The main purpose of this questionnaire is to gather relevant data to
assess the Challenges of Ethical Problems in private banks in general.

Therefore, I am courteously requesting you to fill up carefully and return the questionnaire. The
genuine, honest and reliable response you provide is invaluably important to successfully
accomplish the study. Your response is used only for the successful accomplishment of this

41
 study; hence confidentiality is very respected as well as anonymity is implemented. I thank you
for your time, co-operation and concern.
Notice:
1. You do not need to write your name on this questionnaire.
2. Please, follow the general directions given and respond accordingly.

Thank you in advance for your co-operation.

I. General Information
Please fill in the following general information about yourself.
a. Sex:
Male Female

b. To which age group do you belong?

Less than 20 20 to 30 years
30 to 40 years 40 to 60 years
c. What is your current position?
Below Team leader level Team leader/Supervisor
Division Heads Managers Managers
Executives Others --------------------------

d. How long have you served in the Bank?

Less than 1 year 2 to 4 years
II to 10 years above 10 years

42
II. Questionnaire
1. Your opinion as a professional is highly valued and important to understand workplace
ethics please indicate by selecting one alternative how the following statements apply to
your workplace or organization.
→ please choose among the options list below in the table after reading statements under the
statement row.

S.N Statements Options

Yes No Uncertain
1 Does your Bank have ethics governance arrangements?

2. Does the Bank have a written code of ethics?

3 If the answer to Q2. Is YES, is it readily available like for

example on the Bank’s Website?
4 During the past year at work, have you been aware of any
conduct that you thought either violated the law or your
organization’s ethical standards?
5 Does your organization have mechanism for awareness creation
and reporting of unethical behavior?
6 In your organization’s daily operations, would you say honesty
is practiced?
7 Do the managers and executives of your organization
demonstrate high ethical standards?
8 Does your organization sees formal delegation as having a role
in supporting ethical decision making?
9 Does your organization have a formal risk management plan
which addresses ethical conduct
10 Does your organization communicate its expectations to
employees in relation to ethical decision making and behavior?
S.N Statements Option
s
Yes No Uncertain

43
11 Is ethical Behavior rewarded in your organization?

12 Is unethical behavior punished in your organization?

13 Are penalties for unethical behavior strictly enforced in your

organization?
14 Is there clear and user friendly complaints and appeals process
for customers and clients in your organization?
15 Have you ever felt pressured to compromise your organization's
standards of ethical conduct?

2. The following table lists a series of work place ethics statements. Kindly choose the alternative that
best represents your opinion to the right of each item by marking (√) in the rectangular box under
each alternative.
1. Strongly disagree 2. Disagree 3. Moderately disagree
4. Neutral 5. Moderately agree 6. Agree
7. Strongly agree

S.N Statements 1 2 3 4 5 6 7

1 There are no employees who drive personal benefits from their

own job potentials and or from potentials of their customers by
using their positions and titles
2 Male employees of the Bank are exposed to more unethical
behavior than female
3 Bankers should place their client’s interest before their own
4 Employees use the Bank's assets and resources productively and
only for the designated purpose
5 Employee benefits like medical, fuel and vehicle are properly
utilized
6 Employees know the core values of the Bank and whatever they
do is in the Bank reflects these core values
7 Employees of the Bank address complaints of customers quickly,
appropriately and according to procedures and take corrective
action when necessary.
8 My organization acts responsibly in all its business dealings (with

44
 customers, clients, suppliers, etc.)
9 The presence of clear policy and procedure has reduced the level
of abuses of unprofessional lending in the Bank
10 Greed and lack of professional training are responsible for the
some incidence of fraud in the Bank.
11 The Bank has proper mechanism to ensure employees business
conduct, and communications are professional, fruitful, and
accurate and reflect its true ethical standards
12 My supervisors support me in following my organization's
standards of ethical behavior
13 The leaders in the Bank balance the needs of the business with
ethical issues appropriately
14 Most of the frauds in the Bank are due to insiders or collaborators
from the Bank

3. What are the most often committed ethical problems by the bank employees in your organization by
your own observation and experience? Please circle the number for each of the following ethical
problems as:
Note that:
5 → For Ethical problem that is committed always
4 → For Ethical problem that is committed usually,
3→ For Ethical problem that is committed sometimes,
2 → For Ethical problem that is committed rarely,
1 → For Ethical problem that is never been committed

S.N Ethical Problems

Most Committed
Ethical Problem

5 4 3 2 1

1 Abuse of power
3 Maladministration
4 Creating fake document
5 Non-observance of rules and working procedures,
45
 6 Collusion
7 Accepting or demanding bribes and gratification
8 Deliberate Procrastination of case or mistreatment of clients

9 Repeated absenteeism or non-observance of office hours

10 Squabbles, insults and aquarelles with clients

11 committing an act of misrepresentation or fraudulent act
12 committing an act of theft or breach of trust
13 committing an immoral act at the place of work
14 Committing sexual violence at the place of work
15 Leaking confidential information outside
16 Favoritism in performing duties
17 Abuse of sick leave
18 Fraud
19 Personal use of work-related resources
21 Leaving office during working hours for person cases
22 Negligence of responsibility
23 Traffic/trading in official influence
4. List down the activities that have been carried out in the bank to improve the ethical suitability of
the employees.
1st __________________________________________
2nd __________________________________________
3rd __________________________________________
Thank you for patiently responding the questionnaire

46