Does green credit policy promote innovation: A case of China

This paper constructs a quasi-natural experiment based on the implementation of the Green Credit Guidelines policy in 2012 in China and analyzes the impact of the green credit policy on enterprises' innovation. The results show that the implementation of the green credit policy has a negative impact on enterprises' innovation. In terms of corporate heterogeneity, the negative effect of green credit policy on enterprises' innovation is greater for state-owned and high-leverage enterprises. Furthermore, mechanism analysis results reveal that credit financing cost is an important intermediary for green credit policy to affect corporate innovation but non-credit financing channels are not obvious.

Automated summary

This paper constructs a quasi-natural experiment based on the implementation of the Green Credit Guidelines policy in 2012 in China and analyzes the impact of the policy on enterprises' innovation. The results show that the implementation of the policy has a negative impact on enterprises' innovation. In terms of corporate heterogeneity, the negative effect is greater for state-owned and high-leverage enterprises. Furthermore, credit financing cost is found to be an important intermediary for the policy's impact on corporate innovation.