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What is it about the financial sector that encourages bad behavior?

scientificamerican.com

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Re: What is it about the financial sector that encourages bad behavior?

#11

Post by w_t_payne »

There is another cultural norm that is prevalent in the financial industry leads (IMHO) to dishonesty. It is an incredibly competitive industry, reliant on a small(ish) number of very well remunerated individuals.

These individuals are put under immense pressure to perform flawlessly. Any mistakes are picked up on very quickly and a perceived weakness can cause the wolves to circle in an instant. There is no incentive to come clean about mistakes, and immense pressure to cover-up and hide any weaknesses or errors.

You can't avoid human fallibility. If you expect perfection, all you get is lies and deceit. The only way to truly outperform is to institutionalise openness, continual improvement, and learning from our mistakes.

Re: What is it about the financial sector that encourages bad behavior?

#12

Post by lotsofmangos »

alexqgb wrote: post #10
tzs wrote: post #2

The actual title of the article is "Banking Culture Encourages Dishonesty". There is no question mark at the end. I point this out because many times people assume that a headline that is in the form of a question means that the answer is "no", and the author is trying to make it sound like there is some question to get people to read. E.g., if you were reporting on an expedition that searched for and failed to find…

"Betteridge's law of headlines is an adage that states: 'Any headline which ends in a question mark can be answered by the word no.' " http://en.wikipedia.org/wiki/Betteridge's_law_of_headlines

lotsofmangos' Law of Headlines:

"Any online article with a headline which ends in a question mark that has comments enabled, will eventually result in a thread regarding 'Betteridge's Law of Headlines'"

edit - thankfully, my version will not become as popular

Re: What is it about the financial sector that encourages bad behavior?

#13

Post by webnrrd2k »

w_t_payne wrote: post #11

There is another cultural norm that is prevalent in the financial industry leads (IMHO) to dishonesty. It is an incredibly competitive industry, reliant on a small(ish) number of very well remunerated individuals. These individuals are put under immense pressure to perform flawlessly. Any mistakes are picked up on very quickly and a perceived weakness can cause the wolves to circle in an instant. There is no incentiv…

That sounds a lot like medicine, and a lot of other professional services.

Re: What is it about the financial sector that encourages bad behavior?

#14

Post by pktgen »

inthewoods wrote: post #9

Banking culture is unique in that it seems completely willing to burn customers - I can't think of any other businesses that have this so embedded in their approach. Imagine a company like Zendesk, where, at the end of the year, they suddenly charged their clients an additional $5k on their credit card just because they had it on file. And yet people and companies continue to do business with them. If a company like…

> And yet people and companies continue to do business with them. If a company like Goldman approached me about doing a deal on a credit swap, I'd assume I'm going to get the shaft - but large pension companies continue to work with them.

This is what I've always wondered: how the hell do companies like Goldman still exist and get business?

Re: What is it about the financial sector that encourages bad behavior?

#15

Post by dang »

batemanesque wrote: post #4
tzs wrote: post #2

The actual title of the article is "Banking Culture Encourages Dishonesty". There is no question mark at the end. I point this out because many times people assume that a headline that is in the form of a question means that the answer is "no", and the author is trying to make it sound like there is some question to get people to read. E.g., if you were reporting on an expedition that searched for and failed to find…

worth noting that the HN admins often silently change submission titles so the poster wasn't necessarily responsible for this

We added the question mark. We sometimes do that when a title makes a highly controversial claim. Otherwise the threads tend to turn into discussions about how the HN title is misleading.

I usually post a comment about this but it was late and I was impatient.

Re: What is it about the financial sector that encourages bad behavior?

#16

Post by dang »

tzs wrote: post #2

The actual title of the article is "Banking Culture Encourages Dishonesty". There is no question mark at the end. I point this out because many times people assume that a headline that is in the form of a question means that the answer is "no", and the author is trying to make it sound like there is some question to get people to read. E.g., if you were reporting on an expedition that searched for and failed to find…

I missed that point about the semantics of the question mark. We just got rid of it by changing the title to the subtitle, which is somewhat less provocative and probably should have been used in the first place.

Re: What is it about the financial sector that encourages bad behavior?

#17

Post by inthewoods »

pktgen wrote: post #14
inthewoods wrote: post #9

Banking culture is unique in that it seems completely willing to burn customers - I can't think of any other businesses that have this so embedded in their approach. Imagine a company like Zendesk, where, at the end of the year, they suddenly charged their clients an additional $5k on their credit card just because they had it on file. And yet people and companies continue to do business with them. If a company like…

> And yet people and companies continue to do business with them. If a company like Goldman approached me about doing a deal on a credit swap, I'd assume I'm going to get the shaft - but large pension companies continue to work with them. This is what I've always wondered: how the hell do companies like Goldman still exist and get business?

To a large extent, I think it is because there are very few companies that can deal with the complexity of, say, going public or writing CDS contracts. So to a certain extent people, particularly large clients with billions under management, don't have much choice.

Re: What is it about the financial sector that encourages bad behavior?

#19

Post by im3w1l »

drinkyouroj wrote: post #5

Interesting article, but I'm not entirely sure I agree with the author's attempt to explain the findings of the original study. The paper upon which this article is based is really cool, because it scientifically confirms something that many people (myself included) already believed: mere participation in our financial industry leads to a certain degree of moral corruption. However, the author of this article goes on…

Or the study was just not adequately powered to discover a difference. Haven't actually read it so just throwing it out there.
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