Dual circulation development model and credit growth.

• This is the first study to examine the effect of economic dual circulation structure (DCS) on credit growth based on the view of structure of economic domestic and external demand. Findings suggest that DCS significantly reduces credit growth. • With free trade zones' establishment as the instrumental variable and multiple periods DID test approach, the endogenous problem is better solved. • The impact of DCS on credit growth depends on industrial structure and technological innovation level. • Fixed investment is one channel of effect of DCS on credit growth. This paper empirically examines the impact of the economic dual circulation structure (DCS) on credit growth for the first time, thus expanding the existing literature on economic structure and credit growth. Using China's provincial data from 1995 to 2021, findings indicate that DCS significantly reduces credit growth, in areas with high ratio of value-added of service-to-manufacturing or with high technological innovation level, this negative effect become more significant. Additionally, fixed investment is one mechanism of this effect. our research is helpful for understanding China's sustainable economic growth and credit growth. [ABSTRACT FROM AUTHOR]