Green credit policy and firm performance: What we learn from China

Yao, Shouyu; Pan, Yuying; Şensoy, Ahmet; Uddin, Gazi Salah; Cheng, Feiyang

doi:10.1016/j.eneco.2021.105415

Cited by 310 publications

(146 citation statements)

References 73 publications

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“…In Model (1), Crashrisk is the stock price crash risk as measured by NCSKEW and DUVOL . Policy indicates the implementation of GCP; following ( Hu et al, 2021 ; Yao et al, 2021 ), it is set to the value of 1 for the years after 2012 when the Green Credit Guidelines was issued, and 0 otherwise. Treat denotes whether the firm is in a heavy-polluting industry or whether it is subject to financial constraints imposed by the GCP; it is set to the value of 1 when the firm belongs to Category A industry or is a heavy-polluting firm (treatment group), and 0 when the firm is non-heavy-polluting firm (control group).…”

Section: Methodsmentioning

confidence: 99%

“…The tightened financing constraints thus increases the stock price crash risks of heavy-polluting firms. Therefore, we believe that GCP influences stock price crash risk through two channels: corporate financial constraints, which can be measured by corporate loan size, corporate loan cost, and the SA index ( Hadlock and Pierce, 2010 ; Yao et al, 2021 ), and information transparency, which can be measured by common financial reporting quality indicators like earnings quality ( DD ), corporate disclosure score ( DSCORE ), number of analysts following ( ANALYST ) and analysts’ earnings forecast accuracy ( ACCURACY ) ( Graham et al, 2005 ; Huddart et al, 2009 ).…”

Section: Introductionmentioning

confidence: 99%

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Green Credit Policy and Corporate Stock Price Crash Risk: Evidence From China

et al. 2022

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Using the promulgation of Green Credit Guidelines in China as the research setting, this paper exploits a quasi-natural experiment to examine the impact of green credit policy on the stock price crash risk of heavy-polluting firms. The results show that green credit policy significantly increases the risk of stock price crash of heavy-polluting firms. Such impact is transmitted through increased financial constraints and reduced information transparency. In addition, we find that the impact of green credit policy on the stock price crash risk is more pronounced in firms with weak external governance and a small size. Our findings provide policy implications for mitigating corporate risks and promoting corporate sustainability.

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Section: Methodsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Green Credit Policy and Corporate Stock Price Crash Risk: Evidence From China

et al. 2022

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“…They found that green credit can increase the value of new energy businesses in a sustainable and long-term way [ 35 ]. Also, it will reduce the corporate performance of heavily polluting companies [ 36 ].…”

Section: Literature Review and Theoretical Hypothesismentioning

confidence: 99%

The Impact of Green Credit on the Green Innovation Level of Heavy-Polluting Enterprises—Evidence from China

Zhang

Duan

Shan

et al. 2022

IJERPH

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This article uses the “Green Credit Guidelines” promulgated in 2012 as an example to construct a quasi-natural experiment and uses the double difference method to test the impact of the implementation of the “Green Credit Guidelines” on the green innovation activities of heavy-polluting enterprises. The study found that, in comparison to non-heavy polluting enterprises, the implementation of green credit policies inhibited the green innovation of all heavy-polluting enterprises. In the analysis of heterogeneity, this restraint effect did not differ significantly due to the nature of property rights and the company’s size. The mechanism test showed that green credit policy limits the efficiency of business investment and increases the cost of financing business debt. Eliminating corporate credit financing, particularly long-term borrowing, negatively impacts the green innovation behavior of listed companies.

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“…High-polluting enterprises are capital-intensive industries and mainly rely on external bank credit nancing to obtain business development funds (Liu et al, 2019;Yao et al, 2021;Wang et al, 2020). Therefore, to urge high-polluting enterprises to implement green transformation at source, the Chinese government promulgated the "Green Credit Guidelines" in 2012.…”

Section: Introductionmentioning

confidence: 99%

“…Wen et al (2021) pointed out that the green credit policy under the Green Credit Guidelines in 2012 has a signi cantly negative effect on the allocation e ciency of credit and the upgrade of energy-intensive enterprises. Yao et al (2021) demonstrated the green credit policy has a "penalty effect", which would signi cantly reduce rm performance in heavily polluting industries. The ultimate goal of green credit is to promote polluting enterprises to achieve transformation and upgrading or to exit projects that may cause major polluting problems rather than directly close these enterprises.…”

Section: Introductionmentioning

confidence: 99%

The Impact of Green Credit Policy on The Firms’ Green Strategy Choices: Green Innovation or Green-Washing?

Gan

zhong

2022

Preprint

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Taking the green credit policy in 2012 as a quasi-natural experiment, this paper has investigated the impact of green credit policy on firms’ green strategy choices in China by using the panel data of the A-share firms listed from 2008 to 2019. The results reveal that green credit improves firms’ green innovation overall. In terms of time, listed firms’ green-washing can be significantly increased at the early stage of the implementation of green credit policy, but as time goes by, such green behavior of firms will be detected, which in turn will motivate firms to improve green innovation. Furthermore, the green credit policy has a more significant effect on the green innovation in firms in localities under high environmental regulation, economically developed regions, and without other alternative financing channels. Firms located in economically underdeveloped and low environmental regulation regions prefer to adopt the behavior of green-washing environmental information. Besides, green innovation by firms after the implementation of green credit can promote corporate financial, environmental, and social performance, while green-washing behavior will damage corporate financial, environmental, and social performance. Our findings contribute to the literature on green credit policy, corporate green innovation, environmental disclosure, and also provide some policy implications to improve the quality of green credit policy in the future.

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Green credit policy and firm performance: What we learn from China

Cited by 310 publications

References 73 publications

Green Credit Policy and Corporate Stock Price Crash Risk: Evidence From China

Green Credit Policy and Corporate Stock Price Crash Risk: Evidence From China

The Impact of Green Credit on the Green Innovation Level of Heavy-Polluting Enterprises—Evidence from China

The Impact of Green Credit Policy on The Firms’ Green Strategy Choices: Green Innovation or Green-Washing?

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