Fostering green development with green finance: An empirical study on the environmental effect of green credit policy in China.

To direct financial resources to cleaner production enterprises and achieve the goal of environmental governance, the Chinese government has devoted increasing efforts to facilitating green finance. As one of the major policies of green finance, the Green Credit Policy (GCP) was issued in 2012. Evaluating whether the GCP can promote green development has important significance, but few studies have explored its policy effects for the investment and financing behavior of "two high" (high energy consumption and high pollution) enterprises and environmental quality from both micro and macro perspectives. Taking the promulgation of the GCP as a quasi-natural experiment, based on a panel dataset involving 945 A-share listed companies and 30 provinces for the period of 2004-2017, this paper adopts the difference-in-difference model to explore the investment and financing behavior changes of enterprises and environmental impacts of the GCP. The following conclusions are derived. (1) The GCP provides incentives for the short-term financing behavior of "two high" enterprises, but it has a punitive effect in the long term and significantly inhibits the investment behavior of such enterprises. (2) The GCP contributes to the mitigation of sulfur dioxide and wastewater emissions. (3) The GCP has a greater effect on investment and financing behavior among state-owned and large-scale "two high" enterprises than among medium-sized and micro enterprises. (4) There exists regional heterogeneity in the effects of the GCP on the investment and financing of "two high" enterprises and environmental quality. The GCP has positive impacts in the eastern and western regions, and the policy effect is not obvious in the central region.