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

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.