Environmental Performance of Firms and Access to Bank Loans

Hongtao Shen, Huiying Wu, Wenbin Long and Le Luo
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Hongtao Shen: Department of Accounting, Research Center of Low Carbon Economy for Guangzhou Region, Jinan University, Guangzhou, Guangdong 510632, P. R. China
Huiying Wu: School of Business, Western Sydney University, Penrith, NSW 2751, Australia
Wenbin Long: School of Accounting, Guangdong University of Foreign Studies, Guangzhou, Guangdong 510006, P. R. China
Le Luo: Macquarie Business School, Macquarie University, Sydney, NSW 2109, Australia

The International Journal of Accounting (TIJA), 2021, vol. 56, issue 02, 1-37

Abstract: This study examines whether better environmental performance of a firm facilitates its access to bank loans in China and how state ownership and regional environmental pollution moderate this relationship. Using a sample of Chinese firms listed on the Shanghai or Shenzhen stock exchanges from 2007 to 2015, we find that better environmental performance is associated with greater access to bank loans, which is consistent with the predictions of risk-management theory. Furthermore, we find that the relationship between environmental performance and access to bank loans is weakened for state-owned firms and strengthened for firms operating in the regions with higher environmental pollution, suggesting that institutional factors play an important role when banks make lending decisions. Our results have implications for managers, policymakers, and banks in the transition to a green economy.

Keywords: Environmental performance; access to bank loans; environmental risk; regional environmental pollution; ownership structure (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1142/S1094406021500074

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