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Can green credit policy alleviate inefficient investment of heavily polluting enterprises? A quasi-natural experiment based on the Green Credit Guidelines

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  • Li, Cong
  • Liu, Jiaxuan
  • Zhou, Yunxu
  • Yang, Benshuo
  • Sun, Jiawen

Abstract

Using the formal implementation of the 2012 Green Credit Guidelines (GCG) as an exogenous shock to construct a quasi-natural experiment, we study the impact of green credit policies on the inefficient investment of heavily polluting enterprises in China's listed enterprises from 2008 to 2020. We find that green credit policies can significantly alleviate the inefficient investment of heavily polluting enterprises. By reducing agency costs and long-term debts, green credit policies alleviate inefficient investment in heavily polluting enterprises. Moreover, the alleviating effect of green credit policies on the inefficient investment has significant heterogeneity in terms of property rights, internal characteristics.

Suggested Citation

  • Li, Cong & Liu, Jiaxuan & Zhou, Yunxu & Yang, Benshuo & Sun, Jiawen, 2024. "Can green credit policy alleviate inefficient investment of heavily polluting enterprises? A quasi-natural experiment based on the Green Credit Guidelines," Finance Research Letters, Elsevier, vol. 59(C).
    • Handle: RePEc:eee:finlet:v:59:y:2024:i:c:s1544612323011558
    DOI: 10.1016/j.frl.2023.104783
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    Cited by:

    1. Ge, Tao & Hao, Zixuan & Chen, Yuan & Chen, Zhanbo, 2024. "Energy intensity constraints and corporate investment strategies: Evidence from Chinese listed enterprises," Finance Research Letters, Elsevier, vol. 64(C).
    2. Peng, Changhong & Zhang, Shuqin & Rong, Xueyun & Chen, Dongjing, 2024. "Is China's green credit policy effective? -Based on the perspective of enterprise environmental performance and economic performance," International Review of Economics & Finance, Elsevier, vol. 94(C).

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    More about this item

    Keywords

    Green credit guidelines; Inefficient investment; Agent costs; Long-term debt;
    All these keywords.

    JEL classification:

    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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