ABSTRACT Understanding what drives domestic credit (DC) has become increasingly important as G20 economies confront rising financial demands, technological transitions, and global uncertainty. This study explores the structural and institutional determinants of domestic credit to the private sector across 18 G20 countries from 2010 to 2023, using annual data on regulatory quality, innovation, energy intensity, and foreign direct investment (FDI). Employing a rigorous panel econometric framework including IPS unit‐root tests, Pesaran CD diagnostics, Pedroni cointegration, panel‐corrected standard errors (PCSE) estimation, and Driscoll–Kraay robustness, the analysis uncovers a strong and stable long‐run relationship between DC and its macro‐institutional drivers. The results reveal that stronger regulatory quality and higher FDI inflows significantly expand credit availability, while greater investment in innovation further reinforces financial deepening. Conversely, high energy intensity emerges as a structural barrier that weakens credit growth by eroding economic efficiency. These findings highlight that credit development reflects underlying institutional strength, technological progress, and structural efficiency, which indirectly support a Sustainable Development pathway. The study provides new evidence from a decade of post‐crisis and post‐pandemic transitions and offers fresh policy insights for building resilient, innovation‐driven, and financially inclusive economies.
LIU et al. (Thu,) studied this question.