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What does it mean to the environment when a firm mortgages its emission rights? Evidence from corporate green investment

Author

Listed:
  • Wang, Qun
  • Zeng, Yongliang
  • Zhao, Xiangfang

Abstract

Based on a sample of Chinese heavily polluting firms from 2008 to 2019, we examine the impact of the adoption of the emissions rights mortgage (ERM) policy on firm-level green investment. We find that an ERM policy significantly enhances firms’ green investment. This effect is more salient when financial constraints are higher, local marketization levels are higher, and local governments’ environmental concerns are higher. Our study provides empirical evidence and policy implementations for the further development of financial instruments based on emissions rights and other environmental rights, which show that ERM is a sound policy to promote a sustainable environment.

Suggested Citation

  • Wang, Qun & Zeng, Yongliang & Zhao, Xiangfang, 2024. "What does it mean to the environment when a firm mortgages its emission rights? Evidence from corporate green investment," Economics Letters, Elsevier, vol. 244(C).
    • Handle: RePEc:eee:ecolet:v:244:y:2024:i:c:s0165176524004725
    DOI: 10.1016/j.econlet.2024.111988
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    More about this item

    Keywords

    Emissions rights; Green investment; Mortgages; Environment;
    All these keywords.

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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