IDEAS home Printed from https://ideas.repec.org/a/eee/tefoso/v179y2022ics0040162522001901.html
   My bibliography  Save this article

Does green financial policy affect debt-financing cost of heavy-polluting enterprises? An empirical evidence based on Chinese pilot zones for green finance reform and innovations

Author

Listed:
  • Shi, Jinyan
  • Yu, Conghui
  • Li, Yanxi
  • Wang, Tianhe

Abstract

In order to accelerate the green economic transformation, promote the development of green finance and explore reproducible and propagable experiences in terms of institutions and mechanisms, the Chinese government has set up eight pilot zones in five provinces for green finance reform and innovations (GFRIs) in 2017. In this paper, we construct a quasi-natural experiment and explore the impact of this pilot policy on the debt-financing cost of heavy-polluting enterprises with DID method to evaluate the implementation effect of this policy. Furthermore, mechanism analyses are conducted to identify the guidance effect and deep mechanism of the policy. The results demonstrate that the debt-financing cost of heavy-polluting enterprises in the pilot zones decreases substantially after implementing the pilot policy for GFRIs, indicating that the policy has a significant incentive effect. Further mechanism analyses show that the GFRIs pilot policy is conducive to stimulating reputation insurance effect through signal transmission, rather than innovation compensation effect proposed by Porter Hypothesis. The conclusions of this paper play an essential guiding role in the improvement of relevant policies and the expansion and promotion of the pilot zones. Moreover, this paper also provides new ideas for heavy-polluting enterprises to respond to the policy shock and formulate future development strategies.

Suggested Citation

  • Shi, Jinyan & Yu, Conghui & Li, Yanxi & Wang, Tianhe, 2022. "Does green financial policy affect debt-financing cost of heavy-polluting enterprises? An empirical evidence based on Chinese pilot zones for green finance reform and innovations," Technological Forecasting and Social Change, Elsevier, vol. 179(C).
    • Handle: RePEc:eee:tefoso:v:179:y:2022:i:c:s0040162522001901
    DOI: 10.1016/j.techfore.2022.121678
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0040162522001901
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.techfore.2022.121678?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Qingma Dong & Shuyang Wen & Xiliang Liu, 2020. "Credit Allocation, Pollution, and Sustainable Growth: Theory and Evidence from China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(12), pages 2793-2811, September.
    2. Xinghe Liu & Enxian Wang & Danting Cai, 2018. "Environmental Regulation and Corporate Financing—Quasi-Natural Experiment Evidence from China," Sustainability, MDPI, vol. 10(11), pages 1-22, November.
    3. Zerbib, Olivier David, 2019. "The effect of pro-environmental preferences on bond prices: Evidence from green bonds," Journal of Banking & Finance, Elsevier, vol. 98(C), pages 39-60.
    4. Yu, Chin-Hsien & Wu, Xiuqin & Zhang, Dayong & Chen, Shi & Zhao, Jinsong, 2021. "Demand for green finance: Resolving financing constraints on green innovation in China," Energy Policy, Elsevier, vol. 153(C).
    5. Taghizadeh-Hesary, Farhad & Mortha, Aline & Farabi-Asl, Hadi & Sarker, Tapan & Chapman, Andrew & Shigetomi, Yosuke & Fraser, Timothy, 2020. "Role of energy finance in geothermal power development in Japan," International Review of Economics & Finance, Elsevier, vol. 70(C), pages 398-412.
    6. Jeong†Bon Kim & Dan A. Simunic & Michael T. Stein & CHEONG H. YI, 2011. "Voluntary Audits and the Cost of Debt Capital for Privately Held Firms: Korean Evidence," Contemporary Accounting Research, John Wiley & Sons, vol. 28(2), pages 585-615, June.
    7. Pittman, Jeffrey A. & Fortin, Steve, 2004. "Auditor choice and the cost of debt capital for newly public firms," Journal of Accounting and Economics, Elsevier, vol. 37(1), pages 113-136, February.
    8. Andreas Karpf & Antoine Mandel, 2018. "The changing value of the ‘green’ label on the US municipal bond market," Nature Climate Change, Nature, vol. 8(2), pages 161-165, February.
    9. Guo, Shujuan & Zan, Botao & Sun, Yuan & Zhang, Meili, 2020. "Effects of top managers’ military experience on technological innovation in the transition economies of China," Technological Forecasting and Social Change, Elsevier, vol. 153(C).
    10. Enxian Wang & Xinghe Liu & Jiapeng Wu & Danting Cai, 2019. "Green Credit, Debt Maturity, and Corporate Investment—Evidence from China," Sustainability, MDPI, vol. 11(3), pages 1-19, January.
    11. Chen, Zhongfei & Zhang, Xiao & Chen, Fanglin, 2021. "Do carbon emission trading schemes stimulate green innovation in enterprises? Evidence from China," Technological Forecasting and Social Change, Elsevier, vol. 168(C).
    12. Alberto Abadie & Alexis Diamond & Jens Hainmueller, 2015. "Comparative Politics and the Synthetic Control Method," American Journal of Political Science, John Wiley & Sons, vol. 59(2), pages 495-510, February.
    13. Zhenyu Jiang & Zongjun Wang & Yanqi Zeng, 2020. "Can voluntary environmental regulation promote corporate technological innovation?," Business Strategy and the Environment, Wiley Blackwell, vol. 29(2), pages 390-406, February.
    14. Adhikari, Binay Kumar & Agrawal, Anup, 2016. "Religion, gambling attitudes and corporate innovation," Journal of Corporate Finance, Elsevier, vol. 37(C), pages 229-248.
    15. Alan B. Krueger & David Card, 2000. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania: Reply," American Economic Review, American Economic Association, vol. 90(5), pages 1397-1420, December.
    16. Mohammed Benlemlih & Mohammad Bitar, 2018. "Corporate Social Responsibility and Investment Efficiency," Post-Print halshs-01321227, HAL.
    17. Haifeng Huang & Jing Zhang, 2021. "Research on the Environmental Effect of Green Finance Policy Based on the Analysis of Pilot Zones for Green Finance Reform and Innovations," Sustainability, MDPI, vol. 13(7), pages 1-14, March.
    18. Ouyang, Xiaoling & Li, Qiong & Du, Kerui, 2020. "How does environmental regulation promote technological innovations in the industrial sector? Evidence from Chinese provincial panel data," Energy Policy, Elsevier, vol. 139(C).
    19. Karásek, Jiří & Pavlica, Jaroslav, 2016. "Green Investment Scheme: Experience and results in the Czech Republic," Energy Policy, Elsevier, vol. 90(C), pages 121-130.
    20. Luo, Sumei & Yu, Shenghui & Zhou, Guangyou, 2021. "Does green credit improve the core competence of commercial banks? Based on quasi-natural experiments in China," Energy Economics, Elsevier, vol. 100(C).
    21. Raghuram G. Rajan, 1998. "The past and future of commercial banking viewed through an incomplete contract lens," Proceedings, Federal Reserve Bank of Cleveland, issue Aug, pages 524-550.
    22. Ren, Shenggang & Hu, Yucai & Zheng, Jingjing & Wang, Yangjie, 2020. "Emissions trading and firm innovation: Evidence from a natural experiment in China," Technological Forecasting and Social Change, Elsevier, vol. 155(C).
    23. Liu, Xinghe & Wang, Enxian & Cai, Danting, 2019. "Green credit policy, property rights and debt financing: Quasi-natural experimental evidence from China," Finance Research Letters, Elsevier, vol. 29(C), pages 129-135.
    24. Meyer, Bruce D, 1995. "Natural and Quasi-experiments in Economics," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(2), pages 151-161, April.
    25. Huiying Chen & Chuanzhe Liu & Fangming Xie & Tong Zhang & Fangyuan Guan, 2019. "Green Credit and Company R&D Level: Empirical Research Based on Threshold Effects," Sustainability, MDPI, vol. 11(7), pages 1-14, March.
    26. Xing, Chao & Zhang, Yuming & Tripe, David, 2021. "Green credit policy and corporate access to bank loans in China: The role of environmental disclosure and green innovation," International Review of Financial Analysis, Elsevier, vol. 77(C).
    27. Goss, Allen & Roberts, Gordon S., 2011. "The impact of corporate social responsibility on the cost of bank loans," Journal of Banking & Finance, Elsevier, vol. 35(7), pages 1794-1810, July.
    28. Linnenluecke, Martina K. & Smith, Tom & McKnight, Brent, 2016. "Environmental finance: A research agenda for interdisciplinary finance research," Economic Modelling, Elsevier, vol. 59(C), pages 124-130.
    29. Bert Scholtens, 2006. "Finance as a Driver of Corporate Social Responsibility," Journal of Business Ethics, Springer, vol. 68(1), pages 19-33, September.
    30. Zhang, Dayong & Zhang, Zhiwei & Managi, Shunsuke, 2019. "A bibliometric analysis on green finance: Current status, development, and future directions," Finance Research Letters, Elsevier, vol. 29(C), pages 425-430.
    31. Longzheng Du & Zhenglin Zhang & Taiwen Feng, 2018. "Linking green customer and supplier integration with green innovation performance: The role of internal integration," Business Strategy and the Environment, Wiley Blackwell, vol. 27(8), pages 1583-1595, December.
    32. Bufan Zhang & Yifeng Wang, 2021. "The Effect of Green Finance on Energy Sustainable Development: A Case Study in China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 57(12), pages 3435-3454, September.
    33. Wu, Zhanchi & Fan, Xiangjun & Zhu, Bangzhu & Xia, Jiahui & Zhang, Lin & Wang, Ping, 2022. "Do government subsidies improve innovation investment for new energy firms: A quasi-natural experiment of China's listed companies," Technological Forecasting and Social Change, Elsevier, vol. 175(C).
    34. Hamamoto, Mitsutsugu, 2006. "Environmental regulation and the productivity of Japanese manufacturing industries," Resource and Energy Economics, Elsevier, vol. 28(4), pages 299-312, November.
    35. Li, Yi & Zhang, Wei, 2021. "Another game in town: Spillover effects of IPOs in China," Journal of Corporate Finance, Elsevier, vol. 67(C).
    36. Clarkson, Peter M. & Li, Yue & Richardson, Gordon D. & Vasvari, Florin P., 2008. "Revisiting the relation between environmental performance and environmental disclosure: An empirical analysis," Accounting, Organizations and Society, Elsevier, vol. 33(4-5), pages 303-327.
    37. Michael E. Porter & Claas van der Linde, 1995. "Toward a New Conception of the Environment-Competitiveness Relationship," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 97-118, Fall.
    38. Lv, Chengchao & Bian, Baocheng & Lee, Chien-Chiang & He, Zhiwen, 2021. "Regional gap and the trend of green finance development in China," Energy Economics, Elsevier, vol. 102(C).
    39. Yanli Wang & Na Zhao & Xiaodong Lei & Ruyin Long, 2021. "Green Finance Innovation and Regional Green Development," Sustainability, MDPI, vol. 13(15), pages 1-19, July.
    40. Mohammed Benlemlih & Mohammad Bitar, 2018. "Corporate Social Responsibility and Investment Efficiency," Journal of Business Ethics, Springer, vol. 148(3), pages 647-671, March.
    41. Song, Malin & Wang, Shuhong & Sun, Jing, 2018. "Environmental regulations, staff quality, green technology, R&D efficiency, and profit in manufacturing," Technological Forecasting and Social Change, Elsevier, vol. 133(C), pages 1-14.
    42. Nandy, Monomita & Lodh, Suman, 2012. "Do banks value the eco-friendliness of firms in their corporate lending decision? Some empirical evidence," International Review of Financial Analysis, Elsevier, vol. 25(C), pages 83-93.
    43. John Maxwell & Christopher Decker, 2006. "Voluntary Environmental Investment and Responsive Regulation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 33(4), pages 425-439, April.
    44. Rassier, Dylan G. & Earnhart, Dietrich, 2015. "Effects of environmental regulation on actual and expected profitability," Ecological Economics, Elsevier, vol. 112(C), pages 129-140.
    45. Olivier David Zerbib, 2019. "The effect of pro-environmental preferences on bond prices: Evidence from green bonds," Post-Print halshs-02008641, HAL.
    46. Gao, Kang & Yuan, Yijun, 2021. "The effect of innovation-driven development on pollution reduction: Empirical evidence from a quasi-natural experiment in China," Technological Forecasting and Social Change, Elsevier, vol. 172(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Li, Yanxi & Yu, Conghui & Shi, Jinyan & Liu, Yuanyuan, 2023. "How does green bond issuance affect total factor productivity? Evidence from Chinese listed enterprises," Energy Economics, Elsevier, vol. 123(C).
    2. Wang, Mei Ling, 2023. "Effects of the green finance policy on the green innovation efficiency of the manufacturing industry: A difference-in-difference model," Technological Forecasting and Social Change, Elsevier, vol. 189(C).
    3. Huang, Hongyun & Mbanyele, William & Wang, Fengrong & Song, Malin & Wang, Yuzhang, 2022. "Climbing the quality ladder of green innovation: Does green finance matter?," Technological Forecasting and Social Change, Elsevier, vol. 184(C).
    4. Xiuli Sun & Cui Zhou & Zhuojiong Gan, 2023. "Green Finance Policy and ESG Performance: Evidence from Chinese Manufacturing Firms," Sustainability, MDPI, vol. 15(8), pages 1-27, April.
    5. Wang, Moran & Li, Xuerong & Wang, Shouyang, 2021. "Discovering research trends and opportunities of green finance and energy policy: A data-driven scientometric analysis," Energy Policy, Elsevier, vol. 154(C).
    6. Qianyi Du & Haoran Pan & Shuang Liang & Xiaoxue Liu, 2023. "Can Green Credit Policies Accelerate the Realization of the Dual Carbon Goal in China? Examination Based on an Endogenous Financial CGE Model," IJERPH, MDPI, vol. 20(5), pages 1-26, March.
    7. Qinglan Wu & Guifu Chen & Jing Han & Liyan Wu, 2022. "Does Corporate ESG Performance Improve Export Intensity? Evidence from Chinese Listed Firms," Sustainability, MDPI, vol. 14(20), pages 1-16, October.
    8. Lu, Yuchen & Gao, Yuqiang & Zhang, Yu & Wang, Junrong, 2022. "Can the green finance policy force the green transformation of high-polluting enterprises? A quasi-natural experiment based on “Green Credit Guidelines”," Energy Economics, Elsevier, vol. 114(C).
    9. Qiang Li & Wenjuan Ruan & Huimin Shi & Erwei Xiang & Feida (Frank) Zhang, 2022. "Corporate environmental information disclosure and bank financing: Moderating effect of formal and informal institutions," Business Strategy and the Environment, Wiley Blackwell, vol. 31(7), pages 2931-2946, November.
    10. Yanli Wang & Xiaodong Lei & Dongxiao Zhao & Ruyin Long & Meifen Wu, 2021. "The Dual Impacts of Green Credit on Economy and Environment: Evidence from China," Sustainability, MDPI, vol. 13(8), pages 1-13, April.
    11. Xing, Chao & Zhang, Yuming & Tripe, David, 2021. "Green credit policy and corporate access to bank loans in China: The role of environmental disclosure and green innovation," International Review of Financial Analysis, Elsevier, vol. 77(C).
    12. Pang, Lidong & Zhu, Meng Nan & Yu, Haiyan, 2022. "Is green finance really a blessing for green technology and carbon efficiency?," Energy Economics, Elsevier, vol. 114(C).
    13. Xiaoyang Xu & Yufan Xie & Emma Serwaa Obobisa & Huaping Sun, 2023. "Has the establishment of green finance reform and innovation pilot zones improved air quality? Evidence from China," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-14, December.
    14. Li, Shihan & Liu, Qingfu & Lu, Lei & Zheng, Kaixin, 2022. "Green policy and corporate social responsibility: Empirical analysis of the Green Credit Guidelines in China," Journal of Asian Economics, Elsevier, vol. 82(C).
    15. Guo, Yunxia & Yu, Mengyao & Xu, Mingchen & Tang, Ying & Huang, Jingran & Liu, Jia & Hao, Yu, 2023. "Productivity gains from green finance: A holistic and regional examination from China," Energy Economics, Elsevier, vol. 127(PA).
    16. Yi Chen & Zhongwen Xu & Xuehao Wang & Yining Yang, 2023. "How does green credit policy improve corporate social responsibility in China? An analysis based on carbon‐intensive listed firms," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(2), pages 889-904, March.
    17. Yanwei Lyu & Yangyang Bai & Jinning Zhang, 2024. "Green finance policy and enterprise green development: Evidence from China," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(1), pages 414-432, January.
    18. Guo, Shu & Zhang, ZhongXiang, 2023. "Green credit policy and total factor productivity: Evidence from Chinese listed companies," Energy Economics, Elsevier, vol. 128(C).
    19. Xingqiang Du & Jianying Weng & Quan Zeng & Yingying Chang & Hongmei Pei, 2017. "Do Lenders Applaud Corporate Environmental Performance? Evidence from Chinese Private-Owned Firms," Journal of Business Ethics, Springer, vol. 143(1), pages 179-207, June.
    20. Fatica, Serena & Panzica, Roberto & Rancan, Michela, 2021. "The pricing of green bonds: Are financial institutions special?," Journal of Financial Stability, Elsevier, vol. 54(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:tefoso:v:179:y:2022:i:c:s0040162522001901. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.sciencedirect.com/science/journal/00401625 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.