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Does the implementation of green credit policy improve the ESG performance of enterprises? Evidence from a quasi-natural experiment in China

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  • Lei, Ni
  • Miao, Qin
  • Yao, Xin

Abstract

The extant literature has largely overlooked how green credit policy (GCP) affects corporate environmental, social, and governance (ESG) performance, which is important in assessing the micro effects of macro-resource allocation. This paper uses the panel data of A-share listed enterprises from 2007 to 2021 in China to investigate the effect of the GCP on corporate ESG performance and its potential mechanism with a difference-in-differences approach. Utilizing the release of the “Green Credit Guidelines” in China as a quasi-natural experiment, we find significant improvement in the ESG performance of green credit-restricted enterprises. Financial constraints and investment efficiency are two plausible channels that affect GCP-enterprise ESG performance nexus. The research results show heterogeneity in enterprise ownership, geographical location, and marketization level. This paper offers convenience for the precise promotion of future green credit policies.

Suggested Citation

  • Lei, Ni & Miao, Qin & Yao, Xin, 2023. "Does the implementation of green credit policy improve the ESG performance of enterprises? Evidence from a quasi-natural experiment in China," Economic Modelling, Elsevier, vol. 127(C).
    • Handle: RePEc:eee:ecmode:v:127:y:2023:i:c:s0264999323002900
    DOI: 10.1016/j.econmod.2023.106478
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    Cited by:

    1. Xuemeng Guo & Jiaxin Ma & Yuting Feng & Bingyao Chen, 2023. "Green Credit Policy and Short-Term Financing for Long-Term Investment: Evidence from China’s Heavily Polluting Enterprises," Sustainability, MDPI, vol. 15(24), pages 1-18, December.

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    More about this item

    Keywords

    Green credit; ESG performance; Financial constraint; China;
    All these keywords.

    JEL classification:

    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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