Shaping sustainable future: The role of central bank in galvanizing corporate ESG performance

Zumian Xiao, Shiqun Ma, Zhenqi Zhang and Lijin Xiang

Finance Research Letters, 2024, vol. 67, issue PA

Abstract: In June 2018, the People's Bank of China (PBOC) adopted a groundbreaking initiative by including green assets as eligible collateral for the Medium-term Lending Facility (MLF). This paper utilizes this policy shift as a quasi-natural experiment to explore its effects on corporate ESG performance. Employing a difference-in-differences approach, our findings reveal a significant enhancement in the ESG scores of affected companies following the implementation of the policy. Further inquiry into the dynamics underlying this improvement suggests that the policy alleviates financing constraints and fosters green innovation and operational efficiency among these companies, thereby boosting their ESG performance.

Keywords: ESG; Central bank; Eligible collateral; Sustainable development (search for similar items in EconPapers)
JEL-codes: E52 E58 Q50 Q56 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:67:y:2024:i:pa:s1544612324008171

DOI: 10.1016/j.frl.2024.105787

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