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Green financial policy and corporate risk-taking: Evidence from China

Author

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  • Deng, Hong
  • Li, You
  • Lin, Yongjia

Abstract

This study investigates the impact of green financial policy on corporate risk-taking, based on data from China's A-share listed companies during 2012–2020. Exploiting a quasi-natural experiment in China, the Green Financial Reform and Innovation Pilot Zones (GFRIPZ), we find that green financial policy has a positive effect on corporate risk-taking. Our analysis shows that the primary effect operates through two channels: reducing agency costs and alleviating financial constraints. The increase in risk-taking is particularly pronounced among companies with low R&D investment and poor ESG performance. This research provides insights for designing more effective environmental programs in emerging economies.

Suggested Citation

  • Deng, Hong & Li, You & Lin, Yongjia, 2023. "Green financial policy and corporate risk-taking: Evidence from China," Finance Research Letters, Elsevier, vol. 58(PB).
    • Handle: RePEc:eee:finlet:v:58:y:2023:i:pb:s1544612323007535
    DOI: 10.1016/j.frl.2023.104381
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    Keywords

    Green finance policy; Green financial reform and innovation pilot zones (GFRIPZ); Corporate risk-taking;
    All these keywords.

    JEL classification:

    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

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