What is it with bankers?

Bank employees, when primed to think about their finance jobs, are more likely to cheat and be dishonest, researchers at the University of Zurich found in a study that enticed them with as much as $US200.

The academics recruited 128 bank employees from a large, international bank - which was given anonymity - and randomly assigned them to two groups. One filled out a survey about their personal lives, and the other answered questions about their banking background.

They were then told to toss a coin 10 times in private, and report the results. If they told researchers they guessed correctly on a toss, they collected $US20 for each correct guess.

The people who'd been asked about their personal lives said they won 51.6 per cent of tosses - a result that would suggest they behaved honestly. Those asked to talk about their banking jobs, though, told the researchers that they won coin tosses 58.2 per cent of the time, more often than probability predicts, according to the study, which was published in the peer-reviewed journal Nature today.

And stunningly, the results in banking didn't carry over to other industries. When the experiment was repeated with 133 employees at other companies, including workers from manufacturing, telecommunications and information technology, no effect on dishonest behavior was found.

The authors of the study interpreted the data to mean that bank employees "are basically honest, but it's the cultural norms at the workplace that are making them dishonest," said researcher Michel Marechal, an assistant professor of economics at the University of Zurich, in a conference call with reporters.

Ernst Fehr, who co-led the study, said the many scandals that have plagued the financial industry in recent times "raise the question whether the business culture in the banking industry is favouring, or at least tolerating, fraudulent or unethical behaviours."

Same result

In the group of bank workers primed to think about their jobs, 8 per cent even reported winning 10 out of 10 tosses, compared with 3 per cent in the control group.

In a follow-up test, the researchers said they repeated the experiment with 80 employees from various other banks and got similar findings.

To rule out the possibility that the dishonesty was triggered by the concept of money, rather than the banking culture, they also ran the experiment with 222 university students, priming half to think about money. No significant effect on dishonesty was found.

Professional oath?

Banks could consider instituting a professional oath akin to the Hippocratic oath taken by doctors, said Alain Cohn, a post-doctoral scholar at the University of Chicago and another of the paper's authors. Responsibility is ultimately in the hands of bank leaders, Cohn said.

"People condition their behaviour on how other people behave," he said on the call. "Bank management should lead by example."

While the study wasn't designed to look for specific reasons for banking culture's effect on honesty, the researchers found a positive correlation between cheating on the experiment and endorsement of materialism.

It's possible that the finance industry puts "a greater emphasis on materialistic values and status-seeking," said Marechal.

Bloomberg/ Reuters