Ethics and Banking: Do Banks Divest Their Kind?

Abstract A growing group of institutional investors use divestment strategically to deter misconducts that are harmful for the climate and society. Based on Kantian ethics, we propose represents investors’ universal absolute moral commitment socially responsible investing (SRI). Following categorical hypothetical imperatives reciprocity as a norm, hypothesize how commit SRI through strategy against ethically reprehensible behaviour banks, especially when these represent banks themselves. Using hand-collected database revelation dates enforcement actions find evidence less likely divest equity holding with misconduct (fined banks) than their non-bank peers. Banks invest responsibly by signing Principles Responsible Investment (PRI) not significantly more fined stocks non-signatory banks. Moreover, whose own legitimacy operate is in question different from non-fined divestment. We European inclined sell holdings permanently United States Therefore, bank’s via divestments influenced cultural norms participate PRI.