"Surname 7banking woes to a regional level. Consequently, the situation added to intensifying concern ofwhether the financial watchdogs are accurately and adequately inspecting Kenyan banks and towhat degree could other malpractices be escaping the regulators.1.1.5.3 Chase Bank KenyaBefore the dust settled on the Dubai bank and imperial bank fiascos, Kenya?s banking sectorwas rocked by yet another scandal in 2016 involving the Chase Bank of Kenya.The bankbecame insolvent after failing to honor its financial obligations after a run on payments.Analytical reports infer to inadequate supervisory mechanisms and downright fraud bymanagement.This particular case has ignited fears that the latest havoc rocking Kenya?sbanking sector is due to structural flaws and systemic problems. The integrity of the Chasebank?s financial statements was questioned, when it overstated its loans and from three billionKenya shillings to thirteen billion shillings. Consequently, the ban was forced to shut downamid this uncertainty.Chase bank blamed its auditor ate the time, Deloitte &Touche, over itsrecommendation for the reclassification of insider loansRemarking on the latest bank fiascos, Governor Njoroge admits that banks are short ofliquidity. Furthermore, he suggests that high rates interest rates were stifling the middle-levelbanks for a while before the insolvency issues. According to Njoroge, the financial problemsdid not start with the three banks but precedes all these concerns in the sector. By looking at theinterbank platform, for example, some banks trade at fair and favorable rates, however whenthey lend to smaller banks, they charge the loan four times higher than the standard rate.While concern is escalating, the present moment represents a critical turning point inthe sector shaped by a prevailing convergence of pressures. A significant amalgamation ofbanks is expected in the foreseeable future, while stringent regulatory oversights are beingperceived as important lessons and being proactively converted into enhanced legislation andprocesses. Meanwhile, pioneering, but disruptive actions in the financial technology domainchallenges the existing state of affairs, not only in the country, but across the region, asNairobi launches itself as the leading financial hub for the entire East African region. Theadvances have caused anxieties far and wide of positive and adverse concerns, with decisionspresently being made that will reshape the future of the financial space. The extent, to whichstakeholders can anticipate breakthroughs as this transformational phase gets started, will be acontributing factor of success.With the banking sector highlighted prominently as a component of Kenya?s Vision2030 and subsequently listed one of six main pillars of financial growth, confronting andovercoming the challenges in this realm will be predominantly significant to attaining aprogressive growth outlook. What is more, with the Kenyan government planning establish avibrant and internationally competitive economic sector with clear investment goals, thecurrent situation provides predictive insights into the larger trajectory and potentialopportunities. In the midst of the disconcerting editorial reports at the onset of the collapse of severalbanks, most of reports seem to apportion blame directly on a prevalent existence of conspiracybetween financial controllers, auditors, and corporate clients, jeopardizing stakeholders? moneyand the country?s economy at large. The extent of descent is huge and the worse times arelooming for the banking sector. From a macro-economic perspective, competing opinions and Surname 8conflicting evidence muddles the understanding of the recent turmoil in a rapidly evolvingmarket.1.2 Statement of the problemRampant speculation abounds in the Kenyan financial sector as the controversy intensifiesregarding the integrity of the banking industry?s structures of corporate governance and overallcredibility. After a troubling turn in that witnessed the plunge of three middle-level banks intoreceivership namely Chase Bank, the Imperial Bank, and Dubai Bank, an emerging trendsuggests a probable prevalent existence of widespread challenges in the banking sector rangingfrom dubious governance practices, inadequate regulation, and flourishing fraudulent activities.Of growing concern is the Kenya Revenue Authority?s inference to the inclusion of otherbanking players such as the cooperative bank of Kenya (Coop), the national Bank of Kenya(NBK) and the Commercial Bank of Africa (CBA) in the list of unethical and financialinstitutions in the country. The KRA alleges that those institutions are guilty of engaging incorruption and evading the payment of taxes. In spite of assurance from the Central Bank, one cannot help making a comparisonbetween the current situation and the speculation that arose in the 1990s when a major bankingfiasco led to the closure of fifty commercial financial institutions as a result of systemic flawsin the sector. The situation ignites questions as to whether the recent instability of the past yearis indicative of structural weaknesses, or rather gaps in controlling oversight due to the pressureand unpleasant mounting anxiety of Nairobi?s rise as East Africa?s economic hub.1.3.0 Objectives of the studyThe aims of this study are:i. To define the factors that influence ethical standards within the banking sector ii. To determine the role of managers and employees in unethical organizations iii. To determine the solution to challenges caused by unethical practices within thebanking sector.iv. To investigate what the clients and employees perceive ethics in the banking sector.v. To find out the importance of having business ethics in the financial services systemvi. To investigate the factors that influence bankers, especially manager to act unethicallyvii. To investigate whether the goals of profit maximization and ethics go hand inhand1.4.0 Research significancePolicy makers will require this information to set up regulations to either protect customers orcontrol the banking sector by ensuring a strict safeguard. Banking is one of the mainstays ofmost economies thus when the field is changing so do the rules that govern this sector to keepup with the changes. The banking crises of the 2000s have only made it imperative for greatercontrol measures to be put in place, and this research will help in this. The management of thebanks can also use this research to come up with a policy that protects against unethicalpractices. Surname 9This research will also be of help to the financial services sector in that it will guidethem understand the dynamics that may impact their ethical standards thus enabling them toratify and implement programs aimed at improving their ethical decision-making. What ismore, this research may be beneficial to other stakeholders such as the Central Bank of Kenya,which is in the process of streamlining the financial industry. Moreover, this study improvesthe public?s understanding and appreciation of the business ethics and adds to the existing bodyof knowledge in the study of ethical practices among Kenyan companies. This study isacademic in nature hence will benefit researchers and academics at the industry and academialevels. It will identify gaps that can be improved in the interest of advanced scholarlydiscussion in the area of business ethics in banking.1.4.1ScopeThe research shall have a limited scope which will focus on the Kenyan banking industry,with a particular focus on three collapsed banks namely the Imperial Bank of Kenya,ChaselBank and the Dubai Bank of Kenya."