Environmental credit regulatory policies and bank loans of heavily polluting firms

Xin Ding, Yixuan Kang, Paresh Kumar Narayan and Yusheng Fan

Energy Economics, 2025, vol. 141, issue C

Abstract: We use the environmental credit rating policy as a quasi-natural experiment to analyze how these policies affect bank loans to heavily polluting firms in China. Utilizing a panel dataset of A-share listed firms and difference-in-differences models, we find that policies (a) reduce the scale and proportion of long-term loans, (b) increase loan costs and financial distress risks, and (c) enhance social responsibility for heavily polluting firms. State-owned firms face stronger regulation, while those in regions with advanced digital financial markets and lower carbon emissions encounter smaller credit constraints.

Keywords: China; Regulation; Environment; Carbon emissions (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:141:y:2025:i:c:s0140988324007588

DOI: 10.1016/j.eneco.2024.108049

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