When the algorithm decides: moral legitimacy, ethical bank managers, and the restorative power of territorial embeddedness

Counts differ because each database indexes a different set of publications. We treat OpenAlex as the canonical count; Google Scholar is not shown (no API, and crawling it violates its ToS).

Purpose This study aims to examine associations between ethical leadership (EL), algorithmic transparency, perceived algorithmic authority (PAA) and employee moral confidence (EMC) in digitally mediated banking. It explores whether territorial embeddedness (TE) supports the reconstruction of human moral legitimacy when decisions are mediated by algorithmic systems. Design/methodology/approach A mixed-methods design was used. In the qualitative phase, two focus groups with rural and urban bank managers were conducted to refine the proposed Algorithmic Moral Displacement Theory (AMDT) framework and adapt measurement items to banking contexts. The quantitative phase tested the model using partial least squares structural equation modeling (PLS-SEM) with data from 606 managers and employees in 79 bank offices in Extremadura, Spain, including 44 rural and 35 urban/semi-urban offices. Mediation and multi-group analysis compared territorial contexts and respondent roles. Findings Perceived moral autonomy of leadership emerged as an intervening mechanism linking EL, algorithmic authority, transparency and TE with EMC. PAA was not directly associated with moral confidence but operated through employees’ evaluations of managerial ethical interpretation. TE was positively associated with managerial moral autonomy and EMC, particularly in rural settings, whereas urban results emphasized transparency and ethical explanation. Originality/value The findings are consistent with moral legitimacy as reconfigured, rather than displaced, in hybrid human–algorithm authority systems. The study positions TE as a relational condition that may support legitimacy reconstruction and highlights ethical bank managers’ interpretive role in algorithmically mediated decisions.