Green Credit, Debt Maturity, and Corporate Investment—Evidence from China

Enxian Wang, Xinghe Liu, Jiapeng Wu and Danting Cai
Additional contact information
Enxian Wang: Institute for Financial and Accounting Studies, Xiamen University, Xiamen 361005, China
Xinghe Liu: School of Management, Xiamen University, Xiamen 361005, China
Jiapeng Wu: School of Management, Xiamen University, Xiamen 361005, China
Danting Cai: School of Hotel and Tourism Management, the Hong Kong Polytechnic University, Hong Kong 999077, China

Sustainability, 2019, vol. 11, issue 3, 1-19

Abstract: Against the backdrop of working hard to build a beautiful country, this paper uses the promulgation of the “Green Credit Guidelines” policy in China as a quasi-natural experiment. Based on a difference-in-differences (DID) model, the results show that, since the promulgation of the Green Credit Guidelines policy, financial institutions have significantly reduced the proportion of long-term debt to heavily polluting enterprises for reasons such as risk aversion and total credit constraints. Due to capital constraints and the restrictive terms of credit approval, the Green Credit Guidelines policy reduces the investment scale and overinvestment of heavily polluting enterprises. The dependency relationship of the debt maturity structure of heavily polluting enterprises with the investment scale and investment efficiency has been reduced. Furthermore, the negative net effect of the Green Credit Guidelines policy on long-term debt is more pronounced in heavily polluting enterprises that lack political connections. However, the promulgation of this policy inhibits the investment scale and the investment efficiency of heavily polluting enterprises (with or without political connections). To a certain extent, these results confirm the “supportive hand” perspective towards political connections. The results of this research could help relevant government departments to understand the microeconomic consequences of the Green Credit Guidelines policy and could help improve and perfect China’s green credit policy.

Keywords: green credit; debt maturity; investment; overinvestment; political connections (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

Downloads: (external link)
https://www.mdpi.com/2071-1050/11/3/583/pdf (application/pdf)
https://www.mdpi.com/2071-1050/11/3/583/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:11:y:2019:i:3:p:583-:d:200079

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().