The impact of green credit on the financial performance of green transformation enterprises: Based on the chain mediation effect of ESG

Qinying Li and Xuesong Gu

International Review of Economics & Finance, 2025, vol. 103, issue C

Abstract: This paper constructs a difference-in-differences model using the “Green Credit Guidelines” as a policy shock to study the impact of green credit policies on the financial performance of green enterprises. Empirical analysis reveals that the green credit policy significantly improved the financial performance of green transformation enterprises directly and enhanced corporate financial performance indirectly through lowing the cost of debt capital. Although the policy did not have a direct impact on the cost of equity capital of green enterprises, it can play a role in reducing the cost of capital through the chain mediation mechanism of “Green Credit - ESG performance - cost of capital - financial performance”, thereby improving the performance of green enterprises. Green credit also promotes the performance of green enterprises through two channels: enhancing the growth potential of green enterprises and improving ESG performance. Heterogeneity analysis finds that the promotional effect of green credit policies on the performance of green enterprises is more significant in underdeveloped areas and among small and medium-sized enterprises.

Keywords: Green credit; ESG performance; Chinese A-share green enterprises; Cost of capital (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:103:y:2025:i:c:s1059056025006884

DOI: 10.1016/j.iref.2025.104525

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