Willful defaulting of bank loans in a developing country: a Bourdieusian analysis
| Date | 16 July 2024 |
| Pages | 430-443 |
| DOI | https://doi.org/10.1108/JFC-05-2024-0148 |
| Published date | 16 July 2024 |
| Author | Sumon Bhattacharjee,Shimul Chakraborty |
Willful defaulting of bank loans in
a developing country: a
Bourdieusian analysis
Sumon Bhattacharjee and Shimul Chakraborty
Department of Accounting, University of Chittagong, Chittagong, Bangladesh
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 documentsand interviewed
bank managers, loan takers, regulatorsand 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”inthe banking industry.
Findings –Willful defaulting in Bangladesh is an outcomeof 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
possessionof different forms of capital.
Research limitations/implications –Understanding of how the crime of willful defaulting emerges
and persistsin societymay have policy and practice implicationsin economies suffering NPL problems.
Originality/value –This study explicates how individual intents and institutional structures jointly
amplifyfinancial crimes in society.
Keywords Willful default, Financial crime, Bangladesh, Bourdieu, Practice theory
Paper type Research paper
1. Introduction
Non-performing loans (NPLs), commonly known as loans that remain unpaid for a
minimum of 90 days, cause financial distress and significantadverse economic situations in
a country (Ari et al.,2019;Barseghyan, 2010). A borrower may become incapable of
maintaining a debt due to an unpredictable economic downturn (e.g. COVID-19)or business
failure caused by poor managerial decisions (Park and Shin, 2021). NPLs also arise due to
willful and strategicnon-payment, even though the borrower can pay theloans (Jayadev and
Padma, 2020). Sometimes, corruptionin lending (Barth et al., 2009) and improper regulatory
monitoring (Boudriga et al.,2009) also facilitate a borrower’s intentional non-payment. An
intention to default is an opportunistic and dishonest tendency to misappropriate bank
funds. Willful defaulters siphon off the loan or use it for other purposes not specified in the
debt contract, fraudulently sell the property given as a mortgage and intentionally do not
repay the loan (Reserve Bank of India, 2014). These offences resemble the characteristicsof
financial crime, such as crime against property, breach of trust, fraud, concealment and
deception for illegalgain (Leighton-Daly, 2017;Pickett and Pickett, 2002;Sarkar,2019).
This study explores why and how the crime of willful defaultingemerges, permeates and
ultimately becomes a practice in the bankingindustry of a developing country. The existing
JFC
32,2
430
Journalof Financial Crime
Vol.32 No. 2, 2025
pp. 430-443
© Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-05-2024-0148
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1359-0790.htm
Get this document and AI-powered insights with a free trial of vLex and Vincent AI
Get Started for FreeStart Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting