Ethical issues as competitive advantage for bank management

Purpose – Ethics have always played a crucial role in the realm of business and commerce. This paper aims to extract the principle factors of ethical practices to develop a model for competitive advantage in banking and to show the relation between ethical practice and customer satisfaction and the linked reason for satisfaction as a tool for competitive advantage. Design/methodology/approach – Based on the literature review, ethical issues in banking have been identified as a foundation work. Then an empirical study using survey research has been completed. The survey questionnaire has been designed using the literature and pilot survey input. Factor analysis has been conducted to derive ethical factors for competitive advantage from the survey data, which included 186 responses. ?2 tests were also carried out to show the linked relationship between ethical practice, customer satisfaction and reason for satisfaction. Findings – From the analysis, two principle factors have been extracted: the cost leveraging factor; and the value leveraging factor which lead to competitive advantage. More over, it also revealed that high ethical practice results in high customer satisfaction and performance. Practical implications – This study develops a guideline of competitive advantage for bank management through ethical practice. Originality/value – The paper extracts how ethical factors create competitive advantage in banking and the linked reason of ethical practice and performance of banks which has not often received much focus from previous studies.