Work

Green credit policy and energy consumption intensity in China: Firm-level evidence and insights

Year: 2024

Type: article

Abstract: The transition to sustainable development has become a global priority, with energy transformation serving as a key component. In this context, green financial instruments play a crucial role in shaping corporate energy-saving behaviors and promoting sustainable development. This paper examines the impact and mechanism of China's first green credit policy (GCP) on energy consumption intensity (ECI) of manufacturing firms in China, using a difference-in-difference (DID) approach with micro-level data (2004–2009). We find that GCP significantly reduces enterprise ECI, primarily by promoting green technological innovation and capital renewal. We also learn that the effect of GCP varies with firm and industry characteristics, such as financial dependence, size, ownership, capital intensity, and industrial chain position. Moreover, the outcomes suggest that the effect of GCP is stronger in regions with higher degrees of financial development and marketization. This study contributes to the literature on green finance, environmental regulation, and energy efficiency by providing novel evidence on how GCP influences ECI from a micro perspective. • Green credit policy (GCP) significantly reduces corporate energy consumption intensity (ECI). • GCP promotes green technology innovation and capital renewal, which are key drivers in reducing ECI. • The effect of GCP varies with firm characteristics like financial dependence. • Regional financial development and marketization influence the impact of GCP on firms' energy efficiency.

Source: Journal of Environmental Management

DOI: 10.1016/j.jenvman.2024.123664

Authors: Weijie Tan, Yongjian Huang, Xihui Haviour Chen, Andrea Gatto