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Can green credit policy increase corporate pollution abatement efforts? Evidence from China

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  • Lai, Jinming
  • Liu, Xin
  • Yuan, Lu

Abstract

Based on the green credit policy enacted in China since 2012, our study examines the monitoring role of banks in promoting corporate pollution abatement. The results show that the green credit policy has a significantly positive effect on corporate green innovation for polluting firms. Furthermore, we find that the positive effect is more pronounced when banks substitute institutional investors and media to monitor corporate environmental performance, in the product market of intense peer competition, and in regions where environmental regulatory enforcement is strong. These results suggest that the green credit policy strengthens the monitoring force of banks, thus promoting corporate green transformation and development.

Suggested Citation

  • Lai, Jinming & Liu, Xin & Yuan, Lu, 2024. "Can green credit policy increase corporate pollution abatement efforts? Evidence from China," International Review of Economics & Finance, Elsevier, vol. 93(PB), pages 797-813.
    • Handle: RePEc:eee:reveco:v:93:y:2024:i:pb:p:797-813
    DOI: 10.1016/j.iref.2024.05.026
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    References listed on IDEAS

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    Cited by:

    1. Zhang, Can & Liu, Jingyi & Abedin, Mohammad Zoynul & Lucey, Brian, 2025. "Navigating sustainable finance: Examining the impact of sustainable credit policy on energy consumption intensity," Research in International Business and Finance, Elsevier, vol. 73(PA).
    2. Fan, Lin & Peng, Binbin & Lin, Zhongguo & Zou, Hongyang & Du, Huibin, 2024. "The effects of green finance on pollution and carbon reduction: Evidence from China’s industrial firms," International Review of Economics & Finance, Elsevier, vol. 95(C).
    3. Yi Sun & Yiwen Zhu & Cong Li & Kaihua Wang, 2025. "Will Green Credit Affect the Cash Flow of Heavily Polluting Enterprises?," Sustainability, MDPI, vol. 17(1), pages 1-24, January.

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