Frontiers in Environmental Science (Jan 2023)

Can the green credit policy stimulate green innovation of heavily polluting enterprises in China?

  • Xiaojuan Xiong,
  • Tajul Ariffin Masron,
  • Tutik Wiryanti Gondo

DOI
https://doi.org/10.3389/fenvs.2022.1076103
Journal volume & issue
Vol. 10

Abstract

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Introduction: The requirement for more funds has been a significant challenge for China’s heavily polluting enterprises (HPEs) to embark on green innovation.Methods: This study takes China’s 2012 Green Credit Guidelines (GCGs) as a quasi-natural experiment to examine their effect on the quality and quantity of green innovation in HPEs. Using the data of Chinese listed companies from 2007 to 2020 and the difference-in-differences (DID) model.Results: We found that the Green Credit Guidelines could significantly improve the number of enterprises’ green innovation but not their quality.Discussion: As part of the potential solutions, this study proposes 1) the implementation of specific green fiscal policies to complement the existing green credit policies by the government, 2) a more comprehensive range of green financing products by financial institutions, and 3) the active development of funding from non-bank sources, such as venture capital or commercial credit.

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