Ethical Issues in the Financial System

This assignment examines ethical challenges within the financial system, focusing on issues faced by financial professionals, investors, and other stakeholders. It discusses the importance of transparency and disclosure in financial trading, highlighting consequences of unethical practices such as insider trading and manipulation of information. The report analyzes real-world examples and emphasizes the impact of ethical considerations on market stability and investor confidence.

Ethics and issues in finance 1
Name of the student-
Topic- Ethical issues in financial system
University Name-

Ethics and issues in finance 2
This report shows reflect the key issues and ethical problems faced by financial people in
organizations, investors in financial market and other stakeholders in financial services. With the
increasing ramification of economic change, financial system helps in exchanging of funds
between lenders, investors and borrowers. Ethics in financial system is related to having
complete disclosure in the financial trading of business. This financial system operates at
national, global and firm-specific level. Money market, credit and finance are used as media of
exchange in financial system. The ethics in financial system is related to implementing financial
functions effectively. For instance, Australian exchange security exchange board has passed new
rules and regulations to curb the insider trading (Choi and Pae, 2011). There are several ethical
issues in financial system which impacts the investor’s decisions and changes in market
capitalization and fluctuation in business operations. Throughout the time, many companies have
faced problems of scam, insider trading problems and cheats done by ill-intentioned persons. The
main ethical problem arise when the disclosure made by listed company is not as per the listing
rules and regulations and they fail to comply the listing rules and regulations. It is evaluated that
all the ups and down of the share price in market is completely dependent upon the market
information and company’s events. If company fails to disclose the material information then it
will be illegal and unethical as well (Johnson, 2009). This type of business practice in the
financial system destruct the business functioning and increase the fluctuation in share price
(Sorkin, 2010). These kind of problems and ethical issues in financial system arise when
company try to manipulate their material information with a view to increase their overall profit.
However, in short term these unethical business practice could help companies to increase their
overall profit and market capitalization but it could put hard negative impact on the sustainability
of the organization. It is evaluated that if the legal compliance and penalties (Crotty, 2009). In

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addition to this, if financial systems such as capital market, financial market is managed in
effective manner then it could reduce the market loss for investors. However, investors should
invest their money in capital subject to market risk. Each and every company should endeavor
towards providing best benefits for investors. If due to their non-effective compliance if they
face any problems then they should compensate their loss by providing addition benefits.
Now in the end, it could be inferred that the ethical issues in financial system is related to
the wrong financial practice and market making in the stocks of company. After evaluating the
market financial system factors, it could be concluded that making non ethical market making
could help company to increase their profit and market capitalization but it may destruct the
company in long run.

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References
Choi, T.H. and Pae, J., 2011. Business ethics and financial reporting quality: Evidence from
Korea. Journal of Business Ethics, 103(3), pp.403-427.
Crotty, J., 2009. Structural causes of the global financial crisis: a critical assessment of the ‘new
financial architecture’. Cambridge journal of economics, 33(4), pp.563-580.
Johnson, S., 2009. The quiet coup. The Atlantic, 1.
Sorkin, A.R., 2010. Too big to fail: the inside story of how Wall Street and Washington fought to
save the financial system--and themselves. Penguin.