Willful defaulting of bank loans in a developing country: a Bourdieusian analysis

Sumon Bhattacharjee and Shimul Chakraborty

Journal of Financial Crime, 2024, vol. 32, issue 2, 430-443

Abstract: Purpose - Borrowers’ intentional non-payment of bank loans despite being able to pay is a financial crime. This paper explores how willful loan defaulting became a societal practice in Bangladesh, where non-performing loans (NPLs) are assumed to surpass BDT 4 trillion mainly due to habitual defaults of large borrowers. Design/methodology/approach - This study reviewed publicly available documents and interviewed bank managers, loan takers, regulators and industry experts. It drew on Pierre Bourdieu’s practice theory, specifically the concepts- habitus, capital and field, to explain the permeation of “intentional defaulting culture” in the banking industry. Findings - Willful defaulting in Bangladesh is an outcome of a harmonious blend of defaulters’ mindsets and possession of capital supported by the structure and rules of the field. The socio-political context facilitates, rather than impedes, the “unwillingness to pay” motive of the habitual defaulters due to their possession of different forms of capital. Research limitations/implications - Understanding of how the crime of willful defaulting emerges and persists in society may have policy and practice implications in economies suffering NPL problems. Originality/value - This study explicates how individual intents and institutional structures jointly amplify financial crimes in society.

Keywords: Willful default; Financial crime; Bangladesh; Bourdieu; Practice theory (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jfcpps:jfc-05-2024-0148

DOI: 10.1108/JFC-05-2024-0148

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