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.
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.
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.
Understanding of how the crime of willful defaulting emerges and persists in society may have policy and practice implications in economies suffering NPL problems.
This study explicates how individual intents and institutional structures jointly amplify financial crimes in society.
