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Green credit policy and corporate deleveraging: Evidence from China

Author

Listed:
  • Li, Cong
  • Wang, Yiming
  • Sun, Weiguo
  • Yu, Yue
  • Ding, Yuzhen

Abstract

Green Credit Policy (GCP) plays a dual role in environmental protection and financial regulation. Its effectiveness in driving enterprises to deleverage is of great significance in accelerating the development transition. This paper uses the difference-in-differences method to investigate the impact of the Green Credit Guidelines (GCG) on corporate deleveraging in Chinese A-share listed companies between 2007 and 2021. The results show that GCP has a driving effect on enterprise deleveraging. The mechanism tests indicate that corporate leverage ratio can be reduced by increasing financing constraints and reducing the financial distress risk. The findings offer policy implications for promoting high-quality economic development.

Suggested Citation

  • Li, Cong & Wang, Yiming & Sun, Weiguo & Yu, Yue & Ding, Yuzhen, 2024. "Green credit policy and corporate deleveraging: Evidence from China," Finance Research Letters, Elsevier, vol. 66(C).
    • Handle: RePEc:eee:finlet:v:66:y:2024:i:c:s1544612324007244
    DOI: 10.1016/j.frl.2024.105694
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    Keywords

    Green credit policy; Deleveraging; Financing constraints; Financial distress risk;
    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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