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Does carbon emission trading policy affect bank loans of firms? Evidence from China

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  • Zhi Yu
  • Yali Cao
  • Mo Liu

Abstract

Using a carbon emission trading pilot policy in China, we construct a DID method to investigate the effect of carbon emission trading on corporate financial behaviour. We find that enterprises in the pilot areas get less bank loans after the ‘pilot policy’, which indicates that carbon emissions trading has a negative impact on debt financing. Additional analysis shows that the negative influence is more significant in state-owned enterprises. Our study provides a more complete picture of the microeconomic impact of carbon emissions trading, and improves our understanding of the role and significance of corporate ‘carbon assets’ in the capital market.

Suggested Citation

  • Zhi Yu & Yali Cao & Mo Liu, 2022. "Does carbon emission trading policy affect bank loans of firms? Evidence from China," Applied Economics Letters, Taylor & Francis Journals, vol. 29(18), pages 1709-1714, October.
    • Handle: RePEc:taf:apeclt:v:29:y:2022:i:18:p:1709-1714
    DOI: 10.1080/13504851.2021.1959513
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    Cited by:

    1. Goodell, John W. & Gurdgiev, Constantin & Karim, Sitara & Palma, Alessia, 2024. "Carbon emissions and liquidity management," International Review of Financial Analysis, Elsevier, vol. 95(PA).
    2. Han Long & Gen‐Fu Feng & Qiang Gong & Chun‐Ping Chang, 2023. "ESG performance and green innovation: An investigation based on quantile regression," Business Strategy and the Environment, Wiley Blackwell, vol. 32(7), pages 5102-5118, November.
    3. Li, Yu & Yaacob, Mohd Hasimi & Xie, Tao, 2024. "Effects of China's low carbon pilot city policy on corporate green innovation: Considering the mediating role of public environmental concern," Finance Research Letters, Elsevier, vol. 65(C).
    4. Wang, Juling & Liu, Lihua & Ou, Yangchao, 2024. "Low-carbon city pilot policy and corporate environmental violations: Evidence from heavily polluting firms in China," Finance Research Letters, Elsevier, vol. 65(C).

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