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Green credit policy and trade credit: Evidence from a quasi-natural experiment

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  • Gao, Yihong

Abstract

This paper takes the implementation of “Green Credit Guidelines” (GCGs) as a quasi-natural experiment, and employs a difference-in-differences approach to study the impact of green credit policy on trade credit. The study finds that the implementation of GCGs reduces trade credit of high-polluting firms, the impact is via decreasing their bank loans. Moreover, the policy effect occurs in areas with higher financial development and firms with higher financial constraints. Finally, the policy effect enhances the environmental protections of high-polluting firms. This paper not only expands the literature on the policy effect of green credit, but also provides empirical evidence for the theory of trade credit redistribution.

Suggested Citation

  • Gao, Yihong, 2022. "Green credit policy and trade credit: Evidence from a quasi-natural experiment," Finance Research Letters, Elsevier, vol. 50(C).
    • Handle: RePEc:eee:finlet:v:50:y:2022:i:c:s1544612322004846
    DOI: 10.1016/j.frl.2022.103301
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    Cited by:

    1. Liu, Shangqun & Wang, Jiamin & Li, Qian, 2023. "Alternative data and trade credit financing: Evidence from third-party online sales disclosure," Finance Research Letters, Elsevier, vol. 58(PB).
    2. Gao, Yihong & Gao, Jiayan, 2023. "Low-carbon transformation and corporate cash holdings," Finance Research Letters, Elsevier, vol. 54(C).
    3. Gao, Yihong & Gao, Jiayan, 2023. "Employee protection and trade credit: Learning from China's social insurance law," Economic Modelling, Elsevier, vol. 127(C).
    4. Liu, Yang & Huang, Yihan, 2024. "Assessing the interrelationship between fossil fuels resources and the biomass energy market for achieving a sustainable and green economy," Resources Policy, Elsevier, vol. 88(C).
    5. Li, Shibin & Wang, Qian, 2023. "Green finance policy and digital transformation of heavily polluting firms: Evidence from China," Finance Research Letters, Elsevier, vol. 55(PA).

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    More about this item

    Keywords

    Green credit; High-polluting firms; Trade credit; Difference-in-differences approach;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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