Bank deregulation and corporate environmental performance

Shiyi Chen, Tao Chen, Pingyi Lou, Hong Song and Chenyu Wu

World Development, 2023, vol. 161, issue C

Abstract: In this study, we provide one of the first pieces of evidence about how bank deregulation affects corporate environmental performance. We use a unique dataset that contains rich information on firms’ toxic emissions and exploit the bank branching deregulation policy in China. We find that bank deregulation significantly improves firms’ environmental performance, as measured by lower emission intensity of chemical oxygen demand (COD). We further demonstrate that these firms’ production efficiency increases and the ratio of tangible assets to total assets decreases, which suggests that upgrading technology and asset mix are the main channels. To improve the efficiency of the banking system, many developing countries are undergoing or moving toward bank deregulation. By focusing on corporate environmental performance, we document an important but unanticipated result of bank deregulation, and the results also provide policy implications for the burgeoning reform in green finance.

Keywords: Environmental performance; Firms' toxic emission; Bank deregulation; Credit conditions (search for similar items in EconPapers)
JEL-codes: G21 Q53 Q55 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:wdevel:v:161:y:2023:i:c:s0305750x22002960

DOI: 10.1016/j.worlddev.2022.106106

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