An empirical evidence of ethical climate index in rural banks from Board of Directors Perspective

Authors

  • Sunardi Sunardi University of Merdeka Malang
  • Hafid Aditya Pradesa School of Administration – National Agency for State Administration, Bandung

DOI:

https://doi.org/10.14414/jebav.v21i3.1590

Keywords:

Ethical Climate Index, Board of Direc-tors, Rural Banks.

Abstract

The existence of the common image that the management of the rural bank is  not yet professional because of some unethical practices are still happening. Rural bank that is well known for Indonesian people since its target markets are mostly in the rural area. The aim of the study is to investigate what are the most important factors that are reflecting ethical climate in rural banks. The studyinvolves 153  directors of rural banks in Indonesia as respondents. Confirmatory factor analysis (CFA) was used to assess individual parameters in the model, feasibility and the statistical significance of the estimates parameter. The findings show that that ethical climate index is most reflected by collective moral sensitivity, but in contrary boards of directors in rural banks also recognize the lowest perception in this dimension. This would sense an urgency to fostering moral sensitivity among all hierarchies, from top management to the lowest levels in the rural banking.

Author Biography

Sunardi Sunardi, University of Merdeka Malang

Head of Program

References

Arnaud A.,2006, A New Theory and Measure of Ethical Work Climate: The Psychological Process Model (PPM) and the Ethical Climate Index (ECI) (Doctoral’s dissertation, University of Central Florida, Orlando, Florida, United States)

Arnaud A., 2010, Conceptualizing and Measuring Ethical Work Climate : Development and Validation of the Ethical Climate Index, “Business & Societyâ€, 49 (2).

Arnaud A., Schminke M., 2012, The Ethical Climate and Context of Organizations: A Comprehensive Model,“Organization Science†23(6)

Chin W.W., 1998, The partial least squares approach to structural equation modeling. In G.A. Marcoulides (Ed.). Modern Methods for Business Research (pp. 295-336), New Jersey, United States : Lawrence Erlbaum Associates.

ChouT.K., Buchdadi A.D., 2016,Bank Performance and Its Underlying Factors : A Study of Rural Banks in Indonesia,“Accounting and Finance Researchâ€, 5(3).

Cullen J. B., Victor B., Bronson J.W., 1993, The Ethical Climate Questionnaire: An assessment of its development and validity,Psychological Reports, 73 (2)

FornelC., Lacker D.F., 1981,Evaluation structural equation models with unobserved variables and measurement error,â€Journal of Marketing Researchâ€, 18(1)

Harsono S., Widyantoro H., Prawitowati T., Rahmat B., 2017, The Development of Service Quality Model As Criterion in Selecting The Bank in Indonesia, “Polish Journal of Management Studiesâ€, 15(2)

JaseviÄienÄ— F., 2012,The Ethics of Banking : Analysis and Estimates,“Ekonomikaâ€, 91 (3)

Mongid A., Tahir I.M.,2011, Calculating Operational Risk Capital Charges for Indonesian Rural Banks,“Journal of Public and Governanceâ€, 1(1)

Parboteeah K.P., Chen H.C.,Lin Y.T, Chen I.H., Lee A.Y., Chung A., 2010,Establishing Organizational Ethical Climates: How Do Managerial Practices Work?,“Journal of Business Ethicsâ€, 97 (4)

Schminke M. Ambrose,M.L., Neubaum, D.O., 2005, The effect of leader moral development on ethical climate and employee attitudes,Organizational Behavior and Human Decision Processes, 97 (2)

Suar,D., Khuntia R, 2004,Does Ethical Climate Influence Unethical Practices and Work Behaviour?, Journal of Human Values, 10 (1)

Shin Y.,2012, CEO Ethical Leadership, Ethical Climate, Climate Strength,and Collective Organizational Citizenship Behavior,“Journal of Business Ethicsâ€,108

Tseng F.C., Fan Y.J.,2011, Exploring the Influence of Organizational Ethical Climate on Knowledge Management,“Journal of Business Ethicsâ€, 101

Vardi Y., 2001,The Effects of Organizational and Ethical Climates on Misconduct at Work,“Journal of Business Ethicsâ€, 29

Villa J., 2015,,Ethics in Banking – The Role of Moral Values and Judgements in Finance. Palgrave Macmillan UK.

Victor, B., Cullen J. B., 1987, A theory and measure of ethical climate in organizations,“Research in Corporate Social Performance and Policyâ€, 9

Victor, B., Cullen J. B., 1988,The Organizational Bases of Ethical Work Climates,“Administrative Science Quarterlyâ€, 33 (1).

Downloads

Published

2019-03-27

How to Cite

Sunardi, S., & Pradesa, H. A. (2019). An empirical evidence of ethical climate index in rural banks from Board of Directors Perspective. Journal of Economics, Business, and Accountancy Ventura, 21(3), 373–377. https://doi.org/10.14414/jebav.v21i3.1590