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

Mathilde Maurel, Thomas Pernet () and Zhao Ruili ()
Additional contact information
Thomas Pernet: Centre d'Economie de la Sorbonne
Zhao Ruili: Shangai University of International Business and Economics - Chine

Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne

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)
JEL-codes: F36 G20 Q53 Q56 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2019-12
New Economics Papers: this item is included in nep-cna, nep-ene, nep-env and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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ftp://mse.univ-paris1.fr/pub/mse/CES2019/19029.pdf (application/pdf)

Related works:
Working Paper: Financial Dependencies, Environmental Regulation and Pollution Intensity: Evidence From China (2019) Downloads
Working Paper: Financial Dependencies, Environmental Regulation and Pollution Intensity: Evidence From China (2019) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:mse:cesdoc:19029

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