Date
18 December 2017
Shortchanged? May be your bank has been cheating you. Bankers are victims of their own culture, according to a study by Swiss researchers. Photo: Bloomberg
Shortchanged? May be your bank has been cheating you. Bankers are victims of their own culture, according to a study by Swiss researchers. Photo: Bloomberg

Your banker cheated you? Here’s why

We’ve heard these horror stories before, mainly from the news, but we’ve never quite understood the causes behind them.

Now, researchers in Switzerland are helping shine a light on why bankers cheat.

The researchers’ method was unorthodox but their conclusion was cold and definitive: bankers are victims of their own culture. 

The researchers found bankers are more likely to cheat because of a culture that implicitly puts financial gain above all else.

They studied bank workers and other professionals in experiments in which they won more money if they cheated.

The study found bankers were more dishonest when they were made particularly aware of their professional role, Reuters reported Thursday.

When bank employees were primed to think less about their profession and more about normal life, however, they were less inclined to dishonesty.

“Many scandals have plagued the financial industry in the last decade,” Ernst Fehr, a researcher at the University of Zurich who co-led the study, said.

“These scandals raise the question whether the business culture in the banking industry is favoring, or at least tolerating, fraudulent or unethical behaviors.”

Fehr’s team conducted a laboratory game with bankers, then repeated it with other types of workers as comparisons.

The first study involved 128 employees all levels of a large international bank — the researchers were sworn to secrecy about which one — and 80 staff from a range of other banks.

Participants were divided into a treatment group that answered questions about their profession, such as “what is your function at this bank”; or a control group that answered questions unrelated to work, such as “how many hours of TV do you watch each week?”

They were then asked to toss a coin 10 times, unobserved, and report the results. For each toss they knew whether heads or tails would yield a US$20 reward. They were told they could keep their winnings if they were more than or equal to those of a randomly selected subject from a pilot study.

Given maximum winnings of US$200, there was “a considerable incentive to cheat”, Fehr’s team wrote in the journal Nature.

The results showed the control group reported 51.6 percent winning tosses and the treatment group — whose banking identity had been emphasised to them — reported 58.2 percent as wins, giving a misrepresentation rate of 16 percent. The proportion of subjects cheating was 26 percent.

The same experiments with employees in other sectors — including manufacturing, telecoms and pharmaceuticals — showed they don’t become more dishonest when their professional identity or banking-related information is emphasized.

The full study can be seen at http://www.nature.com/nature

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