Green Credit, Debt Maturity, and Corporate InvestmentEvidence from China

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.