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Better prepared, better funded? Environmental emergency response and corporate credit financing

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  • Shi, Yunmeng
  • Zhao, Xinyu
  • Zhang, Fushun

Abstract

This paper investigates the impact of firms’ establishment of emergency response mechanisms for environmental incidents on credit financing. The study finds that such mechanisms can significantly reduce financing cost, optimize financing term structure, and expand financing scale, reflecting their credit enhancement effect beyond environmental governance. Mechanism analysis reveals that emergency response mechanisms alleviate financing constraints by reducing economic losses, strengthening management ability, and enhancing external reputation, thereby improving the overall credit environment of firms. Heterogeneity analysis reveals that this mitigating effect is more pronounced among non-state-owned enterprises, non-greenwashing enterprises, and enterprises located in regions with stricter environmental regulations or a higher degree of marketization. Further analysis indicates that establishing emergency response mechanisms facilitates firms’ ability to obtain upstream commercial credit and attract investment from green financial institutions.

Suggested Citation

  • Shi, Yunmeng & Zhao, Xinyu & Zhang, Fushun, 2026. "Better prepared, better funded? Environmental emergency response and corporate credit financing," Journal of Business Research, Elsevier, vol. 215(C).
    • Handle: RePEc:eee:jbrese:v:215:y:2026:i:c:s0148296326003437
    DOI: 10.1016/j.jbusres.2026.116308
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    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • 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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