How Bank Credit Boosts the High‐Quality Energy Development of Private Enterprises: The Interplay of Leverage Choice and Credit Allocation

High‐quality economic development is a prerequisite for sustainable growth. The key role is played by private companies in this domain. However, private companies often face difficulties in achieving high‐quality development due to leverage control and/or credit constraints. Focusing on the bank credits, this study uses micro data of Chinese private companies from 2017 to 2022. By exploring the issues of leverage choice and allocation traps, we provide empirical evidence on how to promote the high‐quality development of these firms. The benchmark regression indicates that increasing leverage can promote the high‐quality development of private enterprises. In addition, the credit constraints are binding with respect to high‐quality development. Second, the mechanism analysis reveals that the bank credit allocation bias exerts a negative effect, thereby weakening the role of leverage in promoting the high‐quality development of private enterprises. Third, results suggest that private enterprises can enhance profitability or expand operation scale to mitigate the adverse effects of the credit allocation bias. The government policies can also be effective as suggested by the difference‐in‐difference model. Based on these results, policy implications are proposed for government, banks and private enterprises.