Green loans and the transformation of heavy polluters: evidence from China

Lei Xu (), Chen Ma (), Bin Li () and Fei Guo ()
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Lei Xu: University of South Australia
Chen Ma: Shanghai Jiao Tong University
Bin Li: Shandong University
Fei Guo: Shandong University

Journal of Economics and Finance, 2023, vol. 47, issue 4, No 4, 884-911

Abstract: Abstract China has historically imposed its green loan policy since 2012. We examine the impact of green loan policy on the transformation of heavy polluters and find that green loans are favorable towards their green mergers and acquisitions (M&As). Our results also suggest that green loans provide better incentives to heavy polluters in regions of lower pollution, with lower asset specificity, or with fewer financing constraints. Our additional test suggests that the green loan policy may be meaningful for privately owned heavy polluters. Good bank-firm relationships or less GDP pressure on local government may further strengthen such incentives. This study may contribute to the discussion on green loans and the transformation of heavy polluters with policy implications for emerging markets.

Keywords: Green loans; Heavy polluters; Transformation; Green m&a; Green finance (search for similar items in EconPapers)
JEL-codes: G21 G34 Q56 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s12197-023-09628-9

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