Professional Documents
Culture Documents
I would like to present an ethical dilemma situation facing by a loan processing manager who
works in the loan department of a commercial bank. This loan processing manager faces an
unethical issue that concern with his bank manager, he knows that the applicant is not qualifies
for the loan without proper collateral violating the rules and regulations of the bank and
regulatory body, which is central bank of the nation. In the scenario and according to the business
nature, which is a financial institution, the loan processing manage has to face the ethical dilemma
situation and make the right decision whether to approve the loan or refuse the approval of the
loan
Both choices of approving and refusing the loan have their own benefits and drawbacks to the
loan processing manager. By approving the loan, the loan processing manager. By approving the
loan, the loan processing manager may gain benefits that will help him in his career and have
thrust from the bank manager but he will also have the drawback of making him unethical person
that never follow his rights and duty of his own profession. On the other hand, if he refuses the
loan, the loan processing manager will gain the advantage of being an ethical person to the society
and his bank and profession by following his rights or morality but it will also have the possibility
of losing his job if he does not follow the egoism of the bank manager.
Ethical dilemma presented above has two choices, which are to approve the loan or to refuse the
approval. The loan processing manger is facing the dilemma pf making the decision for this case.
Making a wrong decision has a big impact to the stakeholder (freeman, 1984) defines stakeholder
as any group or individual who can affect or is affected by the achievement of the organization
objective) Brennar & Cocharna 1991, ) ( marstein , 2003) of the bank, general interest of the public,
credibility of the bank and the ethics of his profession. Making the right decision would upload the
good name of the bank. Trust from stakeholder, upheld the ethic of his profession, and have
socially agreeable moral intensity particularly social consensus and probability effect parameters.
The choice of approving the loan may help him to gain a good image to his bank manger because
the bank manager will take him as good subordinate. The bank manager may give him better
annual compensation of helping him to do a good job by approving the loan or even offer him a
better position for helping him. This is a crystal clear unethical case specified by consequentialism
of normative ethical theory. The normative ethic s is the attempt to provide a general theory that
tells us how we ought to live (Moral philosophy, 2009). The bank manage does not practice
deontology ethic theory (These prohibition constraint us in what we may do to any person ( not
just those close to us, even in pursuit of good ends( Espen Gamlund , 2010)) that specifying
rightness of action is determine by it conformity to moral rules. If the loan processing manager
approves the loan this time, he may face tis unethical practice repeatedly requested by the bank
manager because the bank manager has found him as a subordinate that can help him to continue
practicing utilitarian by taking advantage on him to approve future loan repeatedly.
When this unethical practice was tp be discovered by the independent auditor team or the loan
cannot be recovered after the lapse the re-payment period, he bank manager will put the blame
on the loan processing manager. The loan processing manager may be given a show cause letter
that subsequently lead him to be expelled by disciplinary board of the bank due to violating the
fundamental ethical value of trust stipulated by the rule and regulation of the bank and not
complying with the regulation laid down by the national regulation body.
On the other hand, if the loan processing manager goes against his ethical principle refusing to
approve the loan, the bank manger will be mad, look down, and resent him. The loan processing
may receive less loan applications to ice approves or become less important to the bank, and even
get demoted to lower position. The bank manager may backstab him when meeting with the chief
executive officer( CEO), or give ruthless comment such as insubordination on the loan process ing
manager. This can cause the loan processing manager to lose his job subsequently because the
bank manager would accuse him ( the loan processing manager) That his performance doe not
meet the key performance index given to him during the annual performance appraisal.
The appropriate decision to be made by the loan processing manager is to reject the request by
the bank manager in order to uphold the principle of normative ethical theory. He should reject
any form consequentialism ethic practice. He should advocate deonthology ethic practice i.e.
pratuice by moral value or even follow the Asian Way of ethic practice by religion values or
practice what is advocate by Crane and Matten (2010). Crane and matten (2010) states that ethic
should be absolute (applied in all time and place), relative (dependent on context ) pr puralr( which
seek a consensus between different ethical tradition)s.
He should report the case to the top management of the bank so that the bank manbagemehnt
can tajke necessary corrective ssaction to rectify this business ethical dilemma. Otherwise, it will
definitely affect the good name, social trust of the socisty, and have socilally agrreable moral
intensity particuylary social consensus and probability effect parameters. Personal wise, the loan
processing manager can uphold the ethic of his profession and uphold the intergrity of financial
profession. If he does the following procedure, the loan processing manager doe not need to face
the dilemma that make him stress on the situation. There is always a better solution than involving
himself in a dilemma situation that is hard to face.
The impact on socity for this dilemma can be concluded by the six component of moral intensity.
Moral intensity is the extent to which a situation or an issue calls for ethical principle application
or the Explainz, n.d). Need to apply moral thoughts and principle diifer with the circumstances or
scenario( explainz, n.d) . Firstly magnitude of consequences ( jones, 1991, pg 374) is mostly score
abetween 8-10 points because this ethical dilemma situation is most likely to happen to anybody
in the society. Second social consensus ( jone 1991, pg 375) in theis dilemma is low because the
type of business ethical dilemma on the above is not acceptable by society, the stakeholder , and
the national regulatory body. Third the probability (Jones, 1991,pg 375) of teffect is also low
because the situation should be happening on a small scale and this irregularitity can be detected
by an annual aduit team. The temporal immediacy ( jones 1991 pg 376) will be high beaucse of
the loan is needed by the situation is laomost immediately and is being controlled by the bank
manager who hads great autonomous authority. Fifth, proximity (jones1991, pg 376) Is high
because the loan processing manager and bank manger are working collague, , one has the right
to approve and one with authority over the loan processing manager. Lastly concentration of
effect 9jone 1991,pg 377) mat be low idf the bank has many branches and it may happen in one
branches or a few and perhaps only a few percent happening due to doung favour for friend and
distinguished person. Thus , The overall moral intensity show that tis a low risk of massive
consequences that would affect a few of us in our location and society, but not happening
immediately.