Bangladesh's banking sector is under severe pressure due to the alarming rise of non-performing loans (NPLs). A large share of these defaults is tied to projects that looked profitable on paper but failed in practice. One key reason is the absence of proper area studies before investment decisions are made.
Area studies, an interdisciplinary approach that integrates history, culture, economics, geography, and politics of a specific region, are critical to ensuring sustainable investments. Ignoring this has already cost our economy heavily. For instance, the coal-fired power plant in Patuakhali, plagued by infrastructure gaps, coal supply issues, and environmental damage, has turned into a white elephant project. In contrast, the solar power project in Rangpur has succeeded because local weather, grid connectivity, and community support were considered beforehand.
Globally, institutions like the World Bank never approve projects without conducting detailed area studies to assess economic potential, environmental risks, and social acceptance. Multinational corporations, too, evaluate local demographics, infrastructure, and culture before entering a market. This ensures both profitability and long-term sustainability.
Bangladesh offers similar lessons. The garment industry, for example, thrives in certain areas but faces setbacks in Gazipur due to labour unrest and weak infrastructure. The Savar leather industry struggles because waste management realities were ignored. On the other hand, the solar project in Tetulia has been both profitable and socially beneficial, precisely because local realities were assessed in advance.
For banks, area studies are particularly important because risks vary widely across regions. Therefore, financial analysis alone cannot ensure sustainable banking. To protect both investments and national development, banks must integrate area studies into their lending practices.
Md. Hassan
Student, Department of Development Studies
Islamic University, Kushtia
hassan633186@gmail.com
