This article focuses on the ethics of payday lending. We present information about the payday lending industry, a range of legal and best practices guidelines for the industry, and finally our own presentation of the most appropriate practices to be used to satisfy both legal and ethical edicts. This effort is made with the hope that business people in general, professionals in the payday lending industry, lawmakers, educators, and even potential consumers may benefit by understanding the driving economic, legal, and (...) social guidelines that can make payday lending services a positive and efficacious addition to our lending industries. (shrink)

The macro-level business ethics in Scholasticism contrasts with modern Anglo-Saxon Capitalism, which is very influential worldwide. Scholasticism, developed between the thirteenth and the mid-seventeenth centuries, deals with key elements of free market morality, including private property, contracts, profits, prices, and free competition. For over 500 years Scholasticism tried to understand economic phenomena and business activities and reflected on them from an ethical perspective. Scholasticism offered the crucial lesson of the centrality of justice and the role of practical wisdom in considering (...) market morality. Justice is seen as both a virtue and a principle, and commutative justice with the common good of society as the reference for the Scholastics, is regarded as being especially important. (shrink)

In this article, we use a corporate social responsibility (CSR) framework to analyze the payday loan industry by critically examining its practices from an economic, legal, and ethical perspective. Payday loans are essentially a very high cost, unsecured, short‐term personal loan. Given the inherent nature of the product being offered, the industry appears on the face of it to be in a position to potentially exploit vulnerable consumers in pursuit of profits. With this concern in mind, our analysis investigates the (...) following three issues: Can the payday loan industry currently be considered to be acting in a socially responsible manner? If the industry cannot be considered to be socially responsible, should it be further regulated? If the industry should be further regulated, how should it be regulated? To address these issues, we first provide a brief historical overview of payday loans. Second, we describe the important characteristics of payday loans and how the industry operates. Third, we draw on various sources of evidence to demonstrate that the payday loan industry, while fulfilling its basic economic obligations, falls outside of both the legal and ethical domains of the Three Domain Model of CSR. Based on our analysis, our conclusion is that the payday loan industry requires additional government legal regulation, particularly with respect to allowable fees, and we conclude that there is a strong ethical case for banning payday loans altogether. (shrink)

Islamic financing instruments can be categorised into profit and loss/risk sharing and non-participatory instruments. Although profit and loss sharing instruments such as musharakah are widely accepted as the ideal form of Islamic financing, prior studies suggest that alternative instruments such as murabahah are preferred by Islamic banks. Nevertheless, prior studies did not explore factors that influence the use of Islamic financing among non-financial firms. Our study fills this gap and contributes new knowledge in several ways. First, we find no evidence (...) of widespread use of Islamic financing instruments across non-financial firms. This is because the instruments are mostly used by less profitable firms with higher leverage. Second, we find that profit and loss sharing instruments are hardly used, whilst the use of murabahah is dominant. Consistent with the prediction of moral-hazard-risk avoidance theory, further analysis suggests that users with a lower asset base are associated with murabahah financing. Third, we present a critical discourse on the contentious nature of murabahah as practised. The economic significance and ethical issues associated with murabahah as practised should trigger serious efforts to steer Islamic corporate financing towards risk-sharing more than the controversial rent-seeking practice. (shrink)