Moral Hazard and Industrial Loan Default: Evidences from Bangladesh

Abstract

Industrial credit providers in developing countries have been experiencing serious financial distress since the late 1970s due to persistent industrial loan default. Despite the application of a number of remedial measures, loan default problem continued to haunt them. This paper advances this argument that one of the prime reasons for loan default is the morally indefensible behaviour of borrowers and lenders in developing countries. The author has provided evidences from Bangladesh in support of such contention and recommends for changes in lenders and borrowers behaviour to create deterrent against moral hazard problems in order to reduce incidents loan default.

Citation

Ziaul Hoque, M. (2003), "Moral Hazard and Industrial Loan Default: Evidences from Bangladesh", Humanomics, Vol. 19 No. 3, pp. 7-17. https://doi.org/10.1108/eb018885