The Need for Executive Management to Positively Apply Social Learning Theory within the Banking Industry

Abstract

Within this essay, I describe social learning theory, its benefits, and then propose how it can be applied among executive leadership within the banking industry to mitigate unethical conduct within the banking industry. In order to explain how social learning theory can be applied, I examine the economic and ethical environment which prevailed in major U.S. banks leading up to and during the financial crisis of 2007-2009. I present a theoretical model which depicts the unethical conduct of banks as a direct contributor to the 2007-2009 financial crisis. The model portrays bank leadership as moderator of the relationship between banks’ unethical conduct and the financial crisis of 2007-2009. Further, I discuss the benefits of social learning theory and propose that the positive application of social learning theory by banks’ executive leadership teams could have promoted ethical conduct within the banking industry and lessened the impact of the crisis. Moreover, I propose that the positive application of social learning theory can reduce the propensity for future crises within the banking industry.