The Impact of Green Finance Policies on Corporate Debt Default Risk—Evidence from China

Li Fan and Weidong Xu ()
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Li Fan: Law School, Jilin University, Changchun 130012, China
Weidong Xu: Law School, Jilin University, Changchun 130012, China

Sustainability, 2025, vol. 17, issue 4, 1-20

Abstract: As global climate change issues have become increasingly severe, green finance has gained widespread attention from governments and financial institutions as a crucial tool for promoting sustainable development. This paper explores the impact of green finance reform pilot zones on corporate debt default risks based on a difference-in-differences model. We found that green finance policies significantly increase corporate debt default risks by exacerbating financing constraints and reducing stock liquidity. A heterogeneity analysis revealed that polluting enterprises, non-state-owned enterprises, and companies in the Eastern region are more susceptible to the impacts of this policy. This paper suggests that the government should formulate differentiated green finance policies tailored to different types of enterprises and regional characteristics.

Keywords: green finance; corporate debt default risk; policy heterogeneity; financing constraints (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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