Interpersonal rivalry complicates the dividing line between these two terms. Young trainees are, of course, interested in promotion and in being seen to shine more than their peers. Where this success is translated into higher and higher pay, there would appear to be an increasing vulnerability in the system, not least in banking where the potential rewards are great indeed.
CEO pay has been rising at a very fast rate in the last 20 years and the ratio of CEO pay to that of the ordinary employee, who has to look often for online cash advance lender, is 100 times. It is easy to see how an ambitious young banker could behave selfishly in order to get the better of an internal rival for a senior post. In this sense, a direct causal link can be made between levels of incentive and selfish behaviour. At the edges, it seems, the morality of the markets becomes somewhat frayed.
The financial markets have shown a remarkable lack of strategic thinking on such issues. The assumption seems to have been that what worked would continue to do so: for instance efficient market theory; and the complex mathematical formulations that undergirded much of the structure surrounding credit derivatives, such as the Black-Scholes options pricing model, the various default correlation measurement tools and also Value at Risk. Another is the continuing assumption that wholesale markets could be a dominant source of finance for mortgage lenders.
Another is that house prices would continue to rise as the basis for 100 per cent-plus mortgages.
There is also the willingness to rely on ratings agencies in the pay of the seller, an inevitable conflict of interest.
Added to this, the intense pressure from shareholders for performance, especially short-term performance, encourages management to exaggerate returns and overlook risks, surely an immoral practice (or, if not strictly immoral, certainly not moral). Royal Bank of Scotland would appear to have done this to its cost. The alignment between bonuses and share prices, a symmetry welcomed by investors, only adds to this pressure.