Does the Green Credit Policy Affect the Scale of Corporate Debt Financing? Evidence from Listed Companies in Heavy Pollution Industries in China

The current study constructs a quasi-natural experiment based on China's 2012 Green Credit Guidelines and develops a difference-in-difference model using the financial data of listed companies from 2006 to 2018 to conduct empirical testing. The results reveal that the green credit policy has significantly reduced the short-term and long-term debt financing of heavily polluting enterprises; however, the restrictions on short-term debt financing are insufficient. At the same time, the decline in operating performance brings financial penalty effects, among which state-owned, large-scale, and heavily polluting enterprises in high-emission areas have strong financial penalty effects. The green credit policy encourages heavy-polluting companies to increase R&D investment and increase fixed assets investments to obtain long-term credit support with short-term investment. Furthermore, it is found that the green credit policies have significantly restrained the scale of debt financing of heavily polluting companies. The Chinese government should formulate green financial policies based on local conditions and provide credit resources to favor environmentally friendly companies. Financial institutions should strictly implement green credit standards and modify financial products and services. Companies should take the initiative to eliminate outdated production capacity to obtain green credit support.