What does it mean to the environment when a firm mortgages its emission rights? Evidence from corporate green investment

Qun Wang, Yongliang Zeng and Xiangfang Zhao

Economics Letters, 2024, vol. 244, issue C

Abstract: Based on a sample of Chinese heavily polluting firms from 2008 to 2019, we examine the impact of the adoption of the emissions rights mortgage (ERM) policy on firm-level green investment. We find that an ERM policy significantly enhances firms’ green investment. This effect is more salient when financial constraints are higher, local marketization levels are higher, and local governments’ environmental concerns are higher. Our study provides empirical evidence and policy implementations for the further development of financial instruments based on emissions rights and other environmental rights, which show that ERM is a sound policy to promote a sustainable environment.

Keywords: Emissions rights; Green investment; Mortgages; Environment (search for similar items in EconPapers)
JEL-codes: G31 M41 Q50 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:244:y:2024:i:c:s0165176524004725

DOI: 10.1016/j.econlet.2024.111988

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