Heterogeneous lending behaviors and gross loan flows in developing economies

This paper explores gross loan flows in the Bangladesh commercial banking sector between 2001 and 2014. I find evidence that relatively substantial loan reallocation exists in the Bangladesh loan market, while the loan market grows quickly during the study period. Loan flows different in bank ownership show heterogeneous patterns. Furthermore, loan flows exhibit cyclical patterns over the business cycle, which is consistent with prior work in the U.S. and South Korea. We also uncover evidence that aggregate shocks are the main driver for net loan growth, while allocative shocks play an important role in driving loan reallocation.