 Does water rights trading affect corporate investment? The role of resource allocation and risk mitigation channelsDuan Liu, Nizhou Yu and Hong Wan Economic Modelling, 2022, vol. 117, issue C Abstract: This study investigates how the water rights trading (WRT) policy affects corporate investment in China. Recent literature mainly discusses the environmental implications of the WRT policy, while the economic consequences are still unclear. Hence, using a rich dataset of 22,321 Chinese firms from 2009 to 2019 and employing a difference-in-differences (DID) approach, we examine the impact of the WRT pilot on corporate investment. The findings show that WRT policy significantly stimulates corporate investment through two mechanisms: optimizing resource allocation and mitigating corporate risk. Furthermore, we provide evidence that the effect of the WRT policy is more prominent in national WRT pilots, areas with higher levels of water endowments and economic development, and non-state-owned firms. Overall, our conclusions provide evidence of the effectiveness of the WRT policy at the firm level. Keywords: Water rights trading pilot; Corporate investment; Resource allocation efficiency; Corporate risk (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:ecmode:v:117:y:2022:i:c:s0264999322003005 DOI: 10.1016/j.econmod.2022.106063 Access Statistics for this article Economic Modelling is currently edited by S. Hall and P. Pauly More articles in Economic Modelling from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.