Financing, credit, moneylending and charging of interest. a Christian-ethical and pastoral perspective

Abstract

Financing of human activity through borrowing from third parties is widespread in the Western world, and such financing may give rise to several questions of moral and ethical character. The type of financing activity, or banking, which has become commonplace, will include lending for commercial enterprises, for specific or general business purposes, for private consumption or mortgaging, for issuance of derivative and/or speculative financial products, for support of financial equities and currency trading, as well as lending and borrowing among public agencies and governments, to mention but the most typical situations. Moneylending will in its contemporary Western usage be expected to involve charging of interest, and will as well be subjected to increasing governmental regulation. Despite increased regulatory interest from governmental agencies, the ethical underpinnings of such banking activity are somewhat unclear, and not uniform among the involved actors. Christian thinkers have been divided as to what moral norms should apply, and traditionally, the matter has been discussed mostly in connection with the level of interest charged by the lender to the borrower. In this dissertation, the practice of moneylending is illuminated from different angles. These include questions regarding the moral defensibility of lending and borrowing, the taking and posting of collateral, third party guarantees, the level of interest that may be charged, the nature of money as social technology, and the place of banking within societal contexts. Through this elaboration, Christian-ethical and pastoral principles are developed, all under the Reformed paradigm, and examples of how such principles harmonise with banking practice are given. A new banking systematic is proposed, whereby banking is given a constructive and participatory societal place, in concert with sound Christian-ethical and pastoral principles. This new banking paradigm is named Pastoral Banking Practice (PBP), to focus its Christian-ethical and pastoral foundations and constructive base ethos. A recommendation to banking practitioners as to the operation of the PBP in real life setting is given in general terms.