Can green credit policy stimulate firms’ green investments?

Ma, Y; Lu, L; Cui, J; Shi, X

Can green credit policy stimulate firms’ green investments?

Ma, Y Lu, L Cui, J Shi, X

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Publisher:: ELSEVIER
Publication Type:: Journal Article
Citation:: International Review of Economics and Finance, 2024, 91, pp. 123-137
Issue Date:: 2024-03-01

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Field	Value	Language
dc.contributor.author	Ma, Y
dc.contributor.author	Lu, L
dc.contributor.author	Cui, J
dc.contributor.author	Shi, X https://orcid.org/0000-0001-9653-7395
dc.date.accessioned	2024-03-18T09:48:27Z
dc.date.available	2024-03-18T09:48:27Z
dc.date.issued	2024-03-01
dc.identifier.citation	International Review of Economics and Finance, 2024, 91, pp. 123-137
dc.identifier.issn	1059-0560
dc.identifier.issn	1873-8036
dc.identifier.uri	http://hdl.handle.net/10453/176879
dc.description.abstract	Green credit policy, a market-oriented green financial tool, aims to achieve simultaneous economic development and environmental protection. Utilizing china's 2012 green credit policy as a quasi-natural experiment, this paper employs a difference-in-differences method to explore its causal impact on Chinese firms' green investment behavior. The empirical results indicate that the green credit policy significantly stimulates the green investments of firms in pollution-intensive sectors compared to those in non-pollution-intensive sectors. This finding remains robust across various tests, including parallel trends, dynamic effects, confounding factors, and alternative methods. Furthermore, the green investment-induced effect is reinforced by the supplementary green credit policy introduced in 2018. The heterogeneity effect reveals that the green credit policy facilitates the green investments of firms with undisclosed environmental information. Additionally, the study finds that the green investment-induced effects are more pronounced among firms with soft financial constraints, limited access to government subsidies, state-owned firms, and larger sizes. These findings shed light on the crucial role of green finance policy in promoting green recovery, suggesting that the government should increase the provision of green credit in terms of quantity and scope.
dc.language	English
dc.publisher	ELSEVIER
dc.relation.ispartof	International Review of Economics and Finance
dc.relation.isbasedon	10.1016/j.iref.2024.01.009
dc.rights	info:eu-repo/semantics/embargoedAccess
dc.subject	1401 Economic Theory, 1402 Applied Economics, 1502 Banking, Finance and Investment
dc.subject.classification	Economics
dc.subject.classification	3501 Accounting, auditing and accountability
dc.subject.classification	3502 Banking, finance and investment
dc.subject.classification	3801 Applied economics
dc.title	Can green credit policy stimulate firms’ green investments?
dc.type	Journal Article
utslib.citation.volume	91
utslib.for	1401 Economic Theory
utslib.for	1402 Applied Economics
utslib.for	1502 Banking, Finance and Investment
pubs.organisational-group	University of Technology Sydney
pubs.organisational-group	University of Technology Sydney/DVC (International)
pubs.organisational-group	University of Technology Sydney/DVC (International)/Australia-China Relations Institute
utslib.copyright.status	embargoed	*
utslib.copyright.embargo	2026-01-01T00:00:00+1000Z
dc.date.updated	2024-03-18T09:48:26Z
pubs.publication-status	Published
pubs.volume	91

Abstract:

Green credit policy, a market-oriented green financial tool, aims to achieve simultaneous economic development and environmental protection. Utilizing china's 2012 green credit policy as a quasi-natural experiment, this paper employs a difference-in-differences method to explore its causal impact on Chinese firms' green investment behavior. The empirical results indicate that the green credit policy significantly stimulates the green investments of firms in pollution-intensive sectors compared to those in non-pollution-intensive sectors. This finding remains robust across various tests, including parallel trends, dynamic effects, confounding factors, and alternative methods. Furthermore, the green investment-induced effect is reinforced by the supplementary green credit policy introduced in 2018. The heterogeneity effect reveals that the green credit policy facilitates the green investments of firms with undisclosed environmental information. Additionally, the study finds that the green investment-induced effects are more pronounced among firms with soft financial constraints, limited access to government subsidies, state-owned firms, and larger sizes. These findings shed light on the crucial role of green finance policy in promoting green recovery, suggesting that the government should increase the provision of green credit in terms of quantity and scope.

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http://hdl.handle.net/10453/176879