Commercial bank law, ethics and management

Author: Wang Yuzhen
Publisher:
Publishing Date: 2005-07-01
Features: Once upon a time, integrity became the most frequently mentioned keyword in China's news coverage. Now, building an integrity-based China has become a consensus from the central government to local authorities, from theoretical researchers to practical workers. However, as the core of integrity and the foundation of banks that prioritize integrity, commercial banks have not fully recognized the significance of integrity, nor have they fully understood their responsibilities, status, and obligations in establishing an integrity-based China. Commercial banks not only have imperfect attention to social integrity but also widely overlook integrity within their own institutions. The generation of large amounts of non-performing assets in China's commercial banks is naturally attributed to historical, social, and market reasons, but factors such as the lack of truthful and in-depth credit investigations by bank credit personnel, weak post-loan management, the failure to implement rules and regulations, and even collusion with unscrupulous merchants to defraud banks remain significant contributors. So, where does the problem lie? Initially, many might assume it is due to the lack of financial legal system development in China. However, with the gradual improvement of China's financial legal system in recent years, there has been no fundamental improvement in dishonest behavior and cases within commercial banks; instead, the trend has worsened. This necessitates seeking causes from other aspects. Further research indicates that while legal system development has achieved significant results, moral development has not kept pace, thereby weakening the binding force of the legal system to some extent. Both laws and morality are norms and standards for regulating human behavior, but they function at different levels. Laws and regulations serve as the foundation, the lowest-level baseline, and the basic rules for maintaining social order and stability. They are the fundamental norms constraining behavior and possess strong coercive power. Morality, on the other hand, is a behavioral constraint built upon laws, encompassing both social moral norms that are higher than legal standards and moral ideals that far exceed the law. It is a social norm constraining behavior, characterized by soft constraints. The harmonious development of human society and behavioral norms are achieved through the combined action of these two systems of norms, which are indispensable, complementary, and irreplaceable. While morality cannot directly impose coercive regulation on the free will of individuals, it plays a crucial role in upholding laws, expanding legal space, supplementing legal constraints, and reinforcing legal norms. It is broader, more enduring, more authentic, and more powerful than laws. The issue lies in our attempt to rely solely on legal constraints while ignoring moral constraints, replacing moral constraints with rigid legal ones, and thus falling into the traps of moral legalization and pervasive legalism. In the process of building a market financial system, moral development plays an indispensable role and strength, and preventing moral risks has become one of the key priorities for China's commercial banks in risk prevention. Rebuilding the moral constraints of commercial banks is not only a requirement for preventing moral risks but also a need for improving management and operational levels, enhancing employees' professional qualities, and preventing operational risks. How can moral constraints be established? Morality is not naturally generated, and the perfection of laws does not necessarily produce morality. It must be achieved through strengthening internal management of commercial banks, i.e., institutional constraints, thereby bridging the gap between law and morality. However, institutional constraints on management do not necessarily evolve into moral constraints. Only management with moral goals, moral education, and moral orientation can form and solidify moral constraints. Therefore, China's commercial banks must clarify the goals and connotations of moral development, integrate moral objectives and elements into the strengthening and refinement of institutional constraints, and form a distinctive management system with Chinese characteristics and national cultural connotations. It is essential to strengthen the basic professional ethics of commercial bank employees, clarify their code of conduct, and regulate and reinforce it within institutional management. Through institutional constraints with moral requirements, moral constraints can be continuously improved and solidified, ultimately forming moral constraints. Only institutional constraints with moral goals and moral education can serve as the foundation for elevating and forming morality based on laws. Thus, the theoretical and practical framework of law, management, and morality is conceptually completed. This is the basic approach for the construction and development of integrity systems within commercial banks. As a financial practitioner who worked at the central bank for eight years and in commercial banks for nine years, I encountered numerous practical problems in my work, especially during the transition period, such as issues related to management systems, operational models, institutional and business innovation, professional management, development strategies and rationality, and talent quality. All these must be reexamined and reviewed from aspects such as systems, institutions, management mechanisms, and business development methods, and are covered in the book. In this book, while a complete theoretical system may not be visible, it is not lacking in theoretical thinking and rational analysis. As a mid-to-high-level financial manager who worked in the general office of a commercial bank, served as two branch heads, and is currently a deputy branch head, I present my years of work experience and insights to everyone. From the mundane details of daily work and simple events in life, I have extracted the rationality of commercial bank management and operation, proposed solutions to practical problems, and pointed out some issues facing China's commercial banks. From this, it is not difficult to see that the author has devoted all their heart to the development of China's commercial banks, and their love for commercial banks is permeated in every word. They hold a fervent expectation and unwavering confidence in the success of China's commercial banks.