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

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  • Yao, Shouyu
  • Pan, Yuying
  • Sensoy, Ahmet
  • Uddin, Gazi Salah
  • Cheng, Feiyang

Abstract

We explore the effect of green credit policy on firm performance of listed firms in China. We find that green credit policy reduces firm performance in heavily polluting industries. This effect is more prominent in state-owned enterprises, firms with large size, high institutional ownership, high analyst coverage and during high economic policy uncertainty period. Moreover, we observe that green credit policy decreases heavily polluting firms' performance by increasing firm financing constraints and decreasing investment level. Our results help to restrain heavily polluting enterprises and promote industrial transformation in developing markets.

Suggested Citation

  • Yao, Shouyu & Pan, Yuying & Sensoy, Ahmet & Uddin, Gazi Salah & Cheng, Feiyang, 2021. "Green credit policy and firm performance: What we learn from China," Energy Economics, Elsevier, vol. 101(C).
    • Handle: RePEc:eee:eneeco:v:101:y:2021:i:c:s014098832100311x
    DOI: 10.1016/j.eneco.2021.105415
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