Green Loans and Green Innovations: Evidence from China’s Equator Principles Banks

Xijia Huang, Yiting Guo, Yuming Lin, Liping Liu and Kai Yan ()
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Xijia Huang: Tourism Research Institute, Nanchang University, Nanchang 330031, China
Yiting Guo: School of Tourism, Nanchang University, Nanchang 330031, China
Yuming Lin: School of Finance, Guangdong University of Foreign Studies, Guangzhou 510420, China
Liping Liu: School of Tourism, Nanchang University, Nanchang 330031, China
Kai Yan: School of Tourism, Nanchang University, Nanchang 330031, China

Sustainability, 2022, vol. 14, issue 20, 1-20

Abstract: Green innovation is critical for promoting environmental protection but largely relies on the support of bank financing. How the participation of banks facilitates green innovation remains largely unexplored. Using a sample of A-share listed firms in China, this study examines the impact of new loans from Equator Principles banks on green innovations. Consistent with the framework of the stakeholder theory, we find that new loans from Equator Principles banks significantly foster green innovations of borrowing firms. Several robustness tests are conducted, and the conclusion remains valid. Further analysis shows that the relief of financial constraints of borrowing firms and the scrutiny of corporate financing projects by Equator Principles banks jointly contribute to the promotion of corporate green innovation. Heterogeneity tests indicate that new loans from Equator Principles banks are more effective in heavily polluting and more competitive industries and among firms with higher levels of executive education. Overall, our findings suggest that stakeholder engagement in environmental governance is an important means of improving corporate green innovations in emerging markets.

Keywords: green loans; green innovations; Equator Principles banks; project scrutiny (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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