Financial Dependencies, Environmental Regulation and Pollution Intensity: Evidence From China

Mathilde Maurel, Thomas Pernet () and Zhao Ruili
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Thomas Pernet: CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, UP1 UFR02 - Université Paris 1 Panthéon-Sorbonne - École d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne
Zhao Ruili: SUIBE - Shangai University of International Business and Economics

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Abstract: We study how a bank's involvement in a firm's financing may be in line with environmental policies pursued by the Chinese central government. Specifically, we evaluate the effectiveness of credit reallocation away from polluting projects when the government imposes stringent environmental policies. We combine the industries' financial dependencies with time, including cross-cities variation in policy intensity to identify the causal effect on the sulfur dioxide (SO2) emission. We find that SO2 emissions are lower in industries with high reliance on credits and stricter environmental regulations. Furthermore, our results suggest that locations with strong environmental policies lead firms to seek funding in less regulated areas, which confirms the pollution haven hypothesis.

Keywords: Banks; Financial Dependency; Environmental regulation; China (search for similar items in EconPapers)
Date: 2019-12
New Economics Papers: this item is included in nep-cna, nep-ene, nep-env and nep-tra
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-02423350
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Citations: View citations in EconPapers (3)

Published in 2019

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Related works:
Working Paper: Financial Dependencies, Environmental Regulation and Pollution Intensity: Evidence From China (2019)
Working Paper: Financial Dependencies, Environmental Regulation, and Pollution Intensity: Evidence From China (2019)
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