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The impact of carbon emission trading on the financing constraints of high-emission enterprises: Evidence from China

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  • He, Chaohua
  • Zhang, Wen

Abstract

Using Difference-in-Differences (DID) and Propensity Score Matching combined with Difference-in-Differences-in-Differences (PSM-DDD) methodologies, this paper examines the impact of China's carbon trading pilot policy on enterprise financing. We find that the high-emission enterprises in pilot regions are less financially constrained, especially for state-owned enterprises. The carbon trading policy may motivate high-emission enterprises to reduce carbon emissions through green technology innovation, thereby ameliorating their financing environment. Our findings suggest the economic significance of carbon emission trading in enterprise financing.

Suggested Citation

  • He, Chaohua & Zhang, Wen, 2024. "The impact of carbon emission trading on the financing constraints of high-emission enterprises: Evidence from China," Finance Research Letters, Elsevier, vol. 67(PB).
    • Handle: RePEc:eee:finlet:v:67:y:2024:i:pb:s1544612324009577
    DOI: 10.1016/j.frl.2024.105927
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    References listed on IDEAS

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    Cited by:

    1. Chen, Songyi & Fan, Qianqian, 2025. "Can market-based environmental regulation promote corporate intelligent transformation: Evidence from the carbon emission trading system," Finance Research Letters, Elsevier, vol. 76(C).
    2. Zhiming Yang & Borui Guo & Xiao-Chen Yuan & Haofeng Lou & Dejian Gao & Tetsuo Noda, 2026. "Firm-level climate policy uncertainty and corporate green innovation: evidence from Chinese firms," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 28(4), pages 10349-10371, April.
    3. Liu, Lin & Liu, Liqun & Liu, Kai & Jiménez-Zarco, Ana Isabel, 2025. "Climate policy and corporate green transformation: Empirical evidence from carbon emission trading," Research in International Business and Finance, Elsevier, vol. 74(C).
    4. Hu, Siyang & Wu, Shaoling, 2025. "Female executives, corporate social responsibility, and green innovation," Finance Research Letters, Elsevier, vol. 79(C).
    5. Zhao, Wen & Zhang, Dongping & Zhao, Yufei, 2025. "The impact of carbon emissions trading on agricultural economic development: Evidence from China's carbon emissions trading pilot policies," International Review of Economics & Finance, Elsevier, vol. 101(C).

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    Keywords

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    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • 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
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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