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Green credit policy and bankruptcy risk of heavily polluting enterprises

Author

Listed:
  • Li, Bing
  • Tang, Kai

Abstract

We investigate the impact of a green credit policy (GCP) on the bankruptcy risk of heavily polluting enterprises (HPEs). We find that a GCP strengthens the bank supervision of HPEs’ production and management behavior (not limited to environmental behavior), thereby reducing their bankruptcy risk. However, since banks are unlikely to strictly supervise local state-owned enterprises and large firms, the negative correlation between the bankruptcy risk of HPEs and a GCP is weakened for such enterprises and firms. We suggest that a GCP can promote the coordinated development of the economy and the environment.

Suggested Citation

  • Li, Bing & Tang, Kai, 2024. "Green credit policy and bankruptcy risk of heavily polluting enterprises," Finance Research Letters, Elsevier, vol. 67(PB).
    • Handle: RePEc:eee:finlet:v:67:y:2024:i:pb:s1544612324009279
    DOI: 10.1016/j.frl.2024.105897
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    References listed on IDEAS

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    More about this item

    Keywords

    Green credit policy; Bankruptcy risk; Heavily polluting enterprises; Coordinated development;
    All these keywords.

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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