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Can green credit policy reduce corporate carbon emission intensity: Evidence from China's listed firms

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  • Pei Xu
  • Penghao Ye
  • Atif Jahanger
  • Siwei Huang
  • Fan Zhao

Abstract

Green credit policy is designed to address the global climate risk. However, few studies have investigated empirically whether green credit policy indeed reduces corporate carbon emission intensity. Based on firm‐level data in China and a difference‐in‐differences model, this study explores how corporate carbon emission intensity evolves following the green credit policy. We find that, on the whole, the green credit can effectively reduce corporate carbon emission intensity, while the dynamic negative effect tends to alleviate after 2017. Specifically, green credit reduces corporate carbon emission intensity mainly through lowering investment carbon intensity and enhancing environmental supervision. However, the signaling mechanism of green credit does not significantly alleviate corporate carbon emission intensity. The green credit has a stronger reduction effect on corporate carbon emission intensity with third‐party certification, non‐state‐owned ownership, and high financing constraint. We thereby suggest that innovations should be made to the standards and processes of green credit to ensure sustainability and stability. Quantitative and standardized corporate environmental information disclosure is essential for the low‐carbon effect on green finance innovation.

Suggested Citation

  • Pei Xu & Penghao Ye & Atif Jahanger & Siwei Huang & Fan Zhao, 2023. "Can green credit policy reduce corporate carbon emission intensity: Evidence from China's listed firms," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(5), pages 2623-2638, September.
    • Handle: RePEc:wly:corsem:v:30:y:2023:i:5:p:2623-2638
    DOI: 10.1002/csr.2506
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    1. Jahanger, Atif & Usman, Muhammad & Kousar, Rakhshanda & Balsalobre-Lorente, Daniel, 2023. "Implications for optimal abatement path through the deployment of natural resources, human development, and energy consumption in the era of digitalization," Resources Policy, Elsevier, vol. 86(PB).
    2. Naveed Ahmad Faraz & Fawad Ahmed & Zhengde Xiong, 2024. "How firms leverage corporate environmental strategy to nurture green behavior: Role of multi‐level environmentally responsible leadership," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(1), pages 243-259, January.
    3. Yang, Shubo & Jahanger, Atif & Usman, Muhammad, 2024. "Examining the influence of green innovations in industrial enterprises on China's smart city development," Technological Forecasting and Social Change, Elsevier, vol. 199(C).
    4. Yang, Shubo & Jahanger, Atif & Hossain, Mohammad Razib & Wang, Yanming & Balsalobre-Lorente, Daniel, 2023. "Enhancing export product quality through innovative cities: A firm-level quasi-natural experiment in China," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 462-478.

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