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Green Credit, Debt Maturity, and Corporate Investment—Evidence from China

Author

Listed:
  • Enxian Wang

    (Institute for Financial and Accounting Studies, Xiamen University, Xiamen 361005, China)

  • Xinghe Liu

    (School of Management, Xiamen University, Xiamen 361005, China)

  • Jiapeng Wu

    (School of Management, Xiamen University, Xiamen 361005, China)

  • Danting Cai

    (School of Hotel and Tourism Management, the Hong Kong Polytechnic University, Hong Kong 999077, China)

Abstract

Against the backdrop of working hard to build a beautiful country, this paper uses the promulgation of the “Green Credit Guidelines” policy in China as a quasi-natural experiment. Based on a difference-in-differences (DID) model, the results show that, since the promulgation of the Green Credit Guidelines policy, financial institutions have significantly reduced the proportion of long-term debt to heavily polluting enterprises for reasons such as risk aversion and total credit constraints. Due to capital constraints and the restrictive terms of credit approval, the Green Credit Guidelines policy reduces the investment scale and overinvestment of heavily polluting enterprises. The dependency relationship of the debt maturity structure of heavily polluting enterprises with the investment scale and investment efficiency has been reduced. Furthermore, the negative net effect of the Green Credit Guidelines policy on long-term debt is more pronounced in heavily polluting enterprises that lack political connections. However, the promulgation of this policy inhibits the investment scale and the investment efficiency of heavily polluting enterprises (with or without political connections). To a certain extent, these results confirm the “supportive hand” perspective towards political connections. The results of this research could help relevant government departments to understand the microeconomic consequences of the Green Credit Guidelines policy and could help improve and perfect China’s green credit policy.

Suggested Citation

  • 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.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:3:p:583-:d:200079
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    5. Yan Yang & Yingli Zhang, 2022. "The Impact of the Green Credit Policy on the Short-Term and Long-Term Debt Financing of Heavily Polluting Enterprises: Based on PSM-DID Method," IJERPH, MDPI, vol. 19(18), pages 1-18, September.
    6. Shixian Ling & Guosheng Han & Dong An & William Cannon Hunter & Hui Li, 2020. "The Impact of Green Credit Policy on Technological Innovation of Firms in Pollution-Intensive Industries: Evidence from China," Sustainability, MDPI, vol. 12(11), pages 1-16, June.
    7. Hengjie Xu & Qiang Mei & Fakhar Shahzad & Suxia Liu & Xingle Long & Jingjing Zhang, 2020. "Untangling the Impact of Green Finance on the Enterprise Green Performance: A Meta-Analytic Approach," Sustainability, MDPI, vol. 12(21), pages 1-16, October.
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    9. 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).
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