BEIJING, Sept. 4 -- Many people believe that in a "money matters" market economy, it's useless to talk about business morality.

    This is a misunderstanding of the market economy, Kin-chok Mun stressed in his speech at Shanghai National Accounting Institute two weeks ago. Mun is emeritus professor of marketing of the Chinese University of Hong Kong.

    "It is not a real market economy if everyone seeks profits regardless of the means he or she uses," says Mun.

    Mun cited the recent U.S. subprime mortgage crisis as an example.

    After the terrorist attacks on Sept. 11, 2001, to boost the U.S. economy and keep it growing, U.S. banks kept their interest rates quite low.

    On seeing the potential business opportunity, many companies in the U.S. were tempted to issue risky loans not only to mortgage borrowers who were unable to provide collateral, but even to private equity firms with little equity capital of their own.

    The companies then sold the loans to banks and funds in the form of bonds to reduce their own risks.

    This enabled the companies to make money easily by setting the interest rates of their loans somewhat higher than those of the banks.

    However, as the overall interest rates in the U.S. kept growing during recent years, the mortgage borrowers could no longer afford to pay for the loans.

    The situation grew so serious that it resulted in a financial crisis across the U.S.

    That even a developed and mature market like the U.S. gets seriously hurt by the immoral behavior of its companies is the best illustration of the importance of business morality to the market economy.

    (Source: Shanghai Daily)