Syndicated Loans and Economic Growth: Empirical Evidence from G7 Countries

Abstract

This paper examines the impact of syndicated loans on economic growth in G7 countries (Canada, France, Italy, Germany, Japan, United Kingdom, and the USA) over the period between 2000 to 2017. Utilizing a panel data analysis along with several pre-tests to assure the validity of data, these tests involve multicollinearity test, stationary test, Hausman test, heteroscedasticity test, and cross-sectional dependence test. The main findings indicate that the growth of syndicated loans has positively affected economic growth in the G7 group. Moreover, the results came in line with previous literature regarding the effect of government expenditures, law enforcement, human capital, and financial stability on economic growth over the period in our sample. However, it is found that liberalization of trade has an adverse effect on economic growth.

Keywords: Syndicated loans, Economic growth, Panel data analysis

JEL Classification: G21, G24, G30