 Greening through finance?Haichao Fan, Yuchao Peng, Huanhuan Wang and Zhiwei Xu () Journal of Development Economics, 2021, vol. 152, issue C Abstract: This paper investigates how green credit regulation affects firms' loan conditions and their economic and environmental performance. In a simple theoretical model, with strengthened green credit regulations, banks raise loan interest rates to nonabatement firms. Firms that were formerly indifferent to pollution abatement must redetermine their abatement and production strategies. Using disaggregated firm-level data, we find that, after the reinforcement of green credit regulation, noncompliant firms saw a larger increase in interest rates, decrease in loan amounts, and more difficulty in access to loans. We further find different impacts on large and small firms in terms of their loans and their financial and economic responses. Regarding the impact on firms’ environmental performance, although all of these firms reduced their total emissions, the reductions are realized in dissimilar ways; large firms reduced their emission intensity by investing more in adopting abatement facilities, while small firms simply choose to produce less. Keywords: Green credit; Loan rate; Environmental penalty; Firm size (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:152:y:2021:i:c:s0304387821000614 DOI: 10.1016/j.jdeveco.2021.102683 Access Statistics for this article Journal of Development Economics is currently edited by M. R. Rosenzweig More articles in Journal of Development Economics from Elsevier |
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