Green credit policy and bankruptcy risk of heavily polluting enterprises

Bing Li and Kai Tang

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

Abstract: We investigate the impact of a green credit policy (GCP) on the bankruptcy risk of heavily polluting enterprises (HPEs). We find that a GCP strengthens the bank supervision of HPEs’ production and management behavior (not limited to environmental behavior), thereby reducing their bankruptcy risk. However, since banks are unlikely to strictly supervise local state-owned enterprises and large firms, the negative correlation between the bankruptcy risk of HPEs and a GCP is weakened for such enterprises and firms. We suggest that a GCP can promote the coordinated development of the economy and the environment.

Keywords: Green credit policy; Bankruptcy risk; Heavily polluting enterprises; Coordinated development (search for similar items in EconPapers)
JEL-codes: G18 G33 M41 (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:pb:s1544612324009279

DOI: 10.1016/j.frl.2024.105897

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