Oil and Water Do Not Mix, or: Aliud Est Credere, Aliud Deponere

Journal of Business Ethics 128 (1):197-206 (2015)
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Abstract

The financial crisis has led to new interest in the ethics of financial markets. In this article, we further the debate on the nature of banking contracts by showing that the fundamental subjective purposes of loan and deposit contracts are irreconcilable. Any resultant mixture of the two contracts is a legal aberration. We consider a mutual fund as an important and legitimate alternative to the common demand deposit to provide high liquidity and some yield without offering full availability of a nominal sum. Besides being a close substitute for how many deposit accounts function today, the mutual fund has the additional benefit of satisfying all legal and ethical requirements. Loan and investment contracts allow for the “bank” to make use of their clients’ funds while the intents of money owners are clearly classified without running into legal or ethical problems

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References found in this work

Some Ethical Dilemmas of Modern Banking.Philipp Bagus & David Howden - 2013 - Business Ethics, the Environment and Responsibility 22 (3):235-245.
Time Deposits, Dimensions, and Fraud.William Barnett & Walter E. Block - 2008 - Journal of Business Ethics 88 (4):711-716.
Some Ethical Dilemmas of Modern Banking.Philipp Bagus & David Howden - 2013 - Business Ethics: A European Review 22 (3):235-245.

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