Salerno asserts that in the debate between those who favor and oppose fractional reserve banking, the important issue is not whether or not this institution is inherently fraudulent, but, rather, does it or does it not cause the business cycle. We join this author in thinking both important; however, we reverse this order.

We stipulate, arguendo, that fractional-reserve-demand deposit banking is per se fraudulent. We ask whether or not time deposit banking can also be illicit, and answer in the positive, if there is a mismatch between the time dimensions of deposits and loans. To wit, if an intermediary borrows short and lends long.

We stipulate, arguendo, that fractional-reserve-demand deposit banking is per se fraudulent. We ask whether or not time deposit banking can also be illicit, and answer in the positive, if there is a mismatch between the time dimensions of deposits and loans. To wit, if an intermediary borrows short and lends long.

In Barnett and Block (J Bus Ethics 88(4):711–716, 2009a), the present authors claim that borrowing short and lending long is fraudulent, and thus ought to be prohibited on legal grounds. Bagus and Howden (J Bus Ethics 90(3):399, 2009) take issue with our ethical analysis. The present paper is our response to these authors; it is an attempt to defend Barnett and Block (J Bus Ethics 88(4):711–716, 2009a) against the very interesting and important, although we believe, erroneous, criticisms of Bagus and (...) Howden (J Bus Ethics 90(3):399, 2009). (shrink)

In Barnett and Block :711–716, 2009a), the present authors claim that borrowing short and lending long is fraudulent, and thus ought to be prohibited on legal grounds. Bagus and Howden :399, 2009) take issue with our ethical analysis. The present paper is our response to these authors; it is an attempt to defend Barnett and Block :711–716, 2009a) against the very interesting and important, although we believe, erroneous, criticisms of Bagus and Howden :399, 2009).

Barnett and Block (Journal of Business Ethics, 2009 ) attack the heart of modern banking by claiming that the practice of borrowing short and lending long is illicit. While their claim of illegitimacy concerning fractional reserve banking can be defended, their justification lacks substance. Their claim is herein strengthened by a legal analysis of deposits and loans based on Huerta de Soto (Money, Bank Credit and Economic Cycles, 2006 ). A combined legal and economic analysis shows that while lending deposits (...) can be regarded as illicit, the maturity mismatching of loans is legitimate contrary to Barnett and Block’s claim. No over-issuance of property rights is involved with this practice once the distinction between present and future goods is taken into account. However, while the practice is not illicit per se , it is greatly assisted and developed through the presence of a fractional reserve banking system, and can sometimes breed detrimental effects. (shrink)

Barnett and Block (J Bus Ethics 18(2):179–194, 2011 ) argue that one cannot distinguish between deposits and loans due to the continuum problem of maturities and because future goods do not exist—both essential characteristics that distinguish deposit from loan contracts. In a similar way but leading to opposite conclusions (Cachanosky, forthcoming) maintains that both maturity mismatching and fractional reserve banking are ethically justified as these contracts are equivalent. We argue herein that the economic and legal differences between genuine deposit and (...) loan contracts are clear. This implies different legal obligations for these contracts, a necessary step in assessing the ethics of both fractional reserve banking and maturity mismatching. While the former is economically, legally, and perhaps most importantly ethically problematic, there are no such troubles with the latter. (shrink)

Tokenistic short-term economic success is not good indicia of long-term success. Sustainable business success requires sustained existence in a corporation's political, economic, social, technological, legal and environmental contexts. Far beyond the traditional economic focus, consumers, governments and public interest groups alike increasingly expect the business sector to take on more social and environmental responsibilities. Corporate social responsibility (CSR) is the model in which economic, social and environmental responsibilities are fulfilled simultaneously. However, there is insufficient empirical evidence that demonstrates genuine widespread (...) adoption of CSR in practice, and its underlying reasons. Though research in CSR has been rapidly growing, its commercial reality and implications need to be further improved if it is to inspire corporations to voluntarily adopt CSR. In the literature, Carroll's four-dimensional (economic, legal, ethical and discretionary) CSR framework offers a theoretical basis for developing an empirically based model to explain why and how profit-motivated managers take up CSR voluntarily. Our study has developed a structural equation model to identify the key factors and their interactions that influence economically motivated managers to take on voluntary CSR, and validate Carroll's four-dimensional construct. The results support Carroll's four-dimensional CSR framework, with the exception of the link pertaining to the relationship between economic and discretionary/voluntary responsibility. This characterises the economic reality that financial market-driven economic responsibility does not automatically translate into social responsibility. Nevertheless, the empirical results demonstrate that corporations can be led to engage in more voluntary CSR activities to achieve social good when appropriate legal and ethical controls are in place. (shrink)

Abstract:Over the last two decades, institutional investing has rocked the world of corporate governance in a transformation that has begun to be reflected in the finance, legal, and management literatures. Traditional players have seen their roles change and bases of power shift, and new actors have entered the governance equation. These transitions have entailed an ethical upheaval that is only beginning to be addressed in the business ethics literature.This paper attempts to facilitate research in this area by integrating various literatures (...) into an examination of a series of business ethics issues related to pension fund activism and portfolio management, fund staffing, and employee compensation. The primary intent of this project is to encourage increased business ethics research in the area of institutional investing in general and pension fund management in particular. (shrink)

This is a translation of "Socialite et argent", a text by Emmanuel Levinas originally published in 1987. Levinas describes the emergence of money out of inter-human relations of exchange and the social relations - sociality - that result. While elsewhere he has presented sociality as "non-indifference to alterity" it appears here as "proximity of the stranger" and points to the tension between an economic system based on money and the basic human disposition to respond to the face of the other (...) person. Money both encodes and effaces sociality, both designates and disguises social relations. It arises from the way that needs and interests are manifested in exchange relations, in what he calls the "interestedness" of economic life. But interests are always already cut through by the fact that being is always "being with others". Being is always "inter-being". Interestedness is always confronted by disinterestedness, that is, by a sociality marked by the "goodness of giving", attachment to and concern for the poverty of the other person. Levinas concludes with a discussion of sociality and justice, posing questions about the tension between the demand to respond to an Other immediately before me and at the same time to respond to the demands of an other Other (the third person) who also invites a response. (shrink)

This is a translation of ‘Socialité et argent’, a text by Emmanuel Levinas originally published in 1987. Levinas describes the emergence of money out of interhuman relations of exchange and the social relations – sociality – that result. While elsewhere he has presented sociality as ‘nonindifference to alterity’ it appears here as ‘proximity of the stranger’ and points to the tension between an economic system based on money and the basic human disposition to respond to the face of the other (...) person. Money both encodes and effaces sociality, both designates and disguises social relations. It arises from the way that needs and interests are manifested in exchange relations, in what he calls the ‘interestedness’ of economic life. But interests are always already cut through by the fact that being is always ‘being with others’. Being is always ‘interbeing’. Interestedness is always confronted by disinterestedness, that is, by a sociality marked by the ‘goodness of giving’, attachment to and concern for the poverty of the other person. Levinas concludes with a discussion of sociality and justice, posing questions about the tension between the demand to respond to an Other immediately before me and at the same time to respond to the demands of an other Other (the third person) who also invites a response. (shrink)

Hedge funds are targets of mounting ethical criticism. The most salient focuses on their opacity. Hedge funds are structured to block transparency for strategic reasons: that is, they systematically deny information to their own investors and to governments in order to protect their competitive advantage, even though the information they hide holds tremendous significance for the interests of both groups. In this article I will detail the ethical allegations made against hedge funds, showing why their opacity creates intractable conflicts that (...) cannot be resolved through government regulation. Sometimes opacity be regulated away; but with hedge funds I show why it cannot because of “regulatory recalcitrance.” In the end a form of voluntary moral coordination, a form of “microsocial contract” instituted as an industry standard, is required relief. In a word, the solution to hedge fund opacity is ethical. (shrink)

Hedge funds are targets of mounting ethical criticism. The most salient focuses on their opacity. Hedge funds are structured to block transparency for strategic reasons: that is, they systematically deny information to their own investors and to governments in order to protect their competitive advantage, even though the information they hide holds tremendous significance for the interests of both groups. In this article I will detail the ethical allegations made against hedge funds, showing why their opacity creates intractable conflicts that (...) cannot be resolved through government regulation. Sometimes opacity be regulated away; but with hedge funds I show why it cannot because of “regulatory recalcitrance.” In the end a form of voluntary moral coordination, a form of “microsocial contract” instituted as an industry standard, is required relief. In a word, the solution to hedge fund opacity is ethical. (shrink)