Can Green Credit Policies Promote Fund Investment? Evidence from China

Jiarui Gao and Tongshui Xia ()
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Jiarui Gao: Business School, Shandong Normal University, Jinan 250358, China
Tongshui Xia: Business School, Shandong Normal University, Jinan 250358, China

Sustainability, 2024, vol. 16, issue 17, 1-20

Abstract: Fund investment, as a type of financial investment in the capital market, is designed to attract more social capital towards the green environmental protection sector and foster a harmonious relationship between economic development, social advancement, and ecological conservation. Therefore, as a significant policy instrument, will implementing the green credit policy impact the investment preferences of fund investors? How does it influence their participation in the market? This study utilizes microdata from Chinese Shanghai and Shenzhen A-share-listed companies from 2004 to 2020 to establish a DID model based on the Green Credit Guidelines introduced in 2012. The research delves into the effects of the green credit policy on fund investment and its underlying mechanisms. The green credit policy was found to favor the entry of fund investment, and the results are still valid after a series of robustness tests. The attraction effect of the green credit policy on investors is more evident in non-state-owned enterprises, small and micro enterprises, and non-green industries. Green credit policy can positively influence investor entry through the financing constraint effect and productivity effect. The study theoretically supplements the literature in the field of evaluating the effect of the green credit policy, and practically provides practical guidance and inspiration for strengthening the synergy of the government, banks, and enterprises in implementing green credit policy, promoting industrial transformation, and upgrading, and realizing high-quality economic development.

Keywords: green credit; fund investment; financing constraints; total factor productivity; non-green credit constrained sectors; baseline test; parallel trend test; robust tests; heterogeneity analysis (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
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