Diversion of funds away from the intended purpose of the loan was a major contributor to the non-performing loans, only surpassed by delayed payment by government (domestic arrears) and cost overruns/ insufficient cash flows. The above three reasons inclusive of diversion of loaned funds and poor management accounted for about sixty five (65) percent of the large Non-Performing loans in our banking industry.
Against this background, I found the paper by Viral Acharya, Jean Imbs and Jason Sturgess very stimulating.