Political Connection, Corruption and Loan Defaulting Propensity: Experience of Bangladeshi Bank High Officials

Authors

  • MD Sajjad Hosain Independent Researcher and Consultant

Keywords:

Political connection, Corruption, Loan clients, Loan defaulting propensity, Bangladeshi banks, Bank officials.

Abstract

The paper aims at identifying the association among political connection (PC), corruption and loan defaulting propensity (LDP) within Bangladeshi banking sector adopting Focus Group Discussion (FGD) technique. I carefully selected 55 bank high officials and managers through purposive sampling technique and divided them into 5 groups providing some keywords. After summarizing the participants’ responses, I discovered that political connection (PC) had a real strong impact on loan defaulting propensity (LDP). To express in another words, politically influential people (clients) were more likely to become commercial and industrial loan defaulters. Further, they reported that there are some corrupted higher ranked bank officials having at good terms with those politically powerful clients. Together those higher bank officials and politically powerful clients make strong syndicates to pass the loans. Later, a major portion of disbursed loans become defaulted. As far as I concern, this paper is one of initial attempts highlighting the connection among political influence, corruption and loan defaulting tendency in Bangladesh. I strongly believe that the outcomes of this study will guide further research initiatives regarding political influence of loan clients as well as for the policymakers to formulate and implement an effective loan sanction policy.

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Published

2022-10-22

How to Cite

Hosain, M. S. (2022). Political Connection, Corruption and Loan Defaulting Propensity: Experience of Bangladeshi Bank High Officials. Journal of Financial Economics and Banking, 3(2), 33-42. Retrieved from http://jofeb.org/index.php/jofeb/article/view/34

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Section

Full Length Articles