Lending Interest Rate, Loaning Scale, and Government Subsidy Scale in Green Innovation

Shuanglian Chen, Zhehao Huang, Benjamin M. Drakeford and Pierre Failler
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Shuanglian Chen: Guangzhou International Institute of Finance, Guangzhou University, Guangzhou 510405, China
Zhehao Huang: Guangzhou International Institute of Finance, Guangzhou University, Guangzhou 510405, China
Benjamin M. Drakeford: Department of Economics and Finance, Portsmouth Business School, University of Portsmouth, Portsmouth PO1 3DE, UK
Pierre Failler: Department of Economics and Finance, Portsmouth Business School, University of Portsmouth, Portsmouth PO1 3DE, UK

Energies, 2019, vol. 12, issue 23, 1-22

Abstract: Green loans are a way of financing green innovation. Two important factors, the lending interest rate and the loaning scale, should be focused on. In this paper, we explore the impact of lending interest rates and loaning scale on green innovation. We show that the incentive of green innovation strongly depends on the lending interest rate and the loaning scale through model analysis. Moreover, the dependence is summarized as a two-step strategy. In the first step, the lending interest rate should be lower than some rate thresholds given in the paper. Otherwise, green innovation fails to be stimulated. In the second step, if the lending interest rate is lower than the given rate threshold, then the practical loaning scale should lie between two thresholds of loaning scale derived in the paper, such that the green innovation will be stimulated. What is more, to guarantee the green effect of the innovation on the environment, we construct a threshold of loaning scale. If the loaning scale is larger than this threshold, then the innovation will show green effect on the environment. Otherwise, green innovation loses its environmental significance. The government stimulates green innovation through government subsidy. In this paper, we consider three kinds of government subsidy, including a subsidy for the bank, subsidy for the enterprise before and after implementing green innovation. Some appropriate government subsidy scales are presented.

Keywords: lending interest rate; loaning scale; government subsidy; green innovation; green finance (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (44)

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