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Green loans and the transformation of heavy polluters: evidence from China

Author

Listed:
  • Lei Xu

    (University of South Australia)

  • Chen Ma

    (Shanghai Jiao Tong University)

  • Bin Li

    (Shandong University)

  • Fei Guo

    (Shandong University)

Abstract

China has historically imposed its green loan policy since 2012. We examine the impact of green loan policy on the transformation of heavy polluters and find that green loans are favorable towards their green mergers and acquisitions (M&As). Our results also suggest that green loans provide better incentives to heavy polluters in regions of lower pollution, with lower asset specificity, or with fewer financing constraints. Our additional test suggests that the green loan policy may be meaningful for privately owned heavy polluters. Good bank-firm relationships or less GDP pressure on local government may further strengthen such incentives. This study may contribute to the discussion on green loans and the transformation of heavy polluters with policy implications for emerging markets.

Suggested Citation

  • Lei Xu & Chen Ma & Bin Li & Fei Guo, 2023. "Green loans and the transformation of heavy polluters: evidence from China," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 47(4), pages 884-911, December.
    • Handle: RePEc:spr:jecfin:v:47:y:2023:i:4:d:10.1007_s12197-023-09628-9
    DOI: 10.1007/s12197-023-09628-9
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    Keywords

    Green loans; Heavy polluters; Transformation; Green m&a; Green finance;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • 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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