NON-REPAYMENT OFBANK LOANS AND RENTAL CHARGES FOR IRRIGATION EQUIPMENT IN BANGLADESH: A CASE OF BUREAUCRATIC AND POLITICAL INEFFICIENCY TRAP?
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Non-repayment of bank loans and rental charges for irrigation equipment is widespread in Bangladesh. Owners/managers of equipment, who are largely rich farmers, do not repay loans or rentals inspite of their large profits accumulated from increased production and water sales. This paper illustrates with field level evidence that the underlying causes of non-repayment are bureaucratic and political inefficiencies associated with allocation and installation of equipment, distribution of loan and provision of support services.