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Strategic or substantive green innovation: How do non-green firms respond to green credit policy?

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Listed:
  • Hu, Yi
  • Jin, Shuchang
  • Ni, Juan
  • Peng, Kai
  • Zhang, Lei

Abstract

How does a green credit policy shape non-green firms' green innovation behavior? Previous literature shows that the green credit policy stimulates the quantity of green innovation but is less focused on its quality. Using the enforcement of the Green Credit Guidelines (GCG) in China as a natural experiment, we investigate the influence of the green credit policy on different types of green innovation (i.e., high and low quality). Consistent with the greenwashing hypothesis, we find that non-green firms strategically increase low-quality green innovations but not high-quality ones after the enforcement of the GCG. Additionally, we show that non-green firms are more likely to increase their patenting activities rather than innovation inputs to boost green patents after the enforcement of the GCG. Our study reveals the unintended consequences of the green credit policy and sheds light on non-green firms' strategic green innovation behavior.

Suggested Citation

  • Hu, Yi & Jin, Shuchang & Ni, Juan & Peng, Kai & Zhang, Lei, 2023. "Strategic or substantive green innovation: How do non-green firms respond to green credit policy?," Economic Modelling, Elsevier, vol. 126(C).
    • Handle: RePEc:eee:ecmode:v:126:y:2023:i:c:s0264999323002638
    DOI: 10.1016/j.econmod.2023.106451
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    Keywords

    Green credit policy; Greenwashing; Green innovation;
    All these keywords.

    JEL classification:

    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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