Economic factors affecting private sector demand for credit: empirical study for countries of Groupe seven (G-7)‎

Abstract EN

The main objective of this study is to investigate what determines credit for private sectors.

the study sample included the seven major industrial countries (G7) for the years (2000-2020) within which the global financial crises and corona virus pandemics were occurred.

by using levin, lin and Chu (LLC) stationary test the null hypothesis indicates nonstationary can't be rejected for all variables at 5% level.

Jarque- Bera diagnostic statistical values indicates that the errors are normally distributed.

also the tests indicate that there is no autocorrelation problem in terms of kai-statistics statistical value.

Based on the panel data result of the Unit Root test, the paper used Weighted Least Squares (WLS) to estimate the parameters of the model.

the outcomes of the study consistent with economic theory, as the demand for credit increases in light of decreasing interest rates and increasing stock price index, investment, inflation, housing price index and consumption variables.

all the results is statistically significant except in the case of stock price index and the short term interest rate which were statistically insignificant.

these results will contribute to the policy makers and financial service providers toward raising or lowering the most effective tools influencing the volume of credit to the private sector form the demand side.

consideration should be given to the long-run interest rates on corporate and household loans to give them more ability to expand the volume of their investments and consumptions, besides other factors; the price indices directly affect private demand for credit.