A theoretical framework for modeling dual-track granting orientation in green credit policy

Abstract

This study delves into the realm of green credit policy, a recognized solution for harmonizing financial growth with environmental progress. It highlights the pivotal role of credit-granting orientation in determining the effectiveness of green credit. Introducing a dual-track mechanism that combines industry and enterprise activity orientation, the study provides novel insights into green credit granting. Based on theoretical modeling and simulation analysis, the study explores how different granting orientations in green credit impact enterprise economic and environmental performance using stochastic dynamic programming. The results underscore that industry-oriented granting constrains eco-innovation capital investment and credit fund inflow, while activity-oriented granting leads to reduced carbon emissions and enhanced enterprise value. A dual-track green credit approach demonstrates a superior balance between the two orientations, delivering higher carbon emission reduction effects than industry-oriented granting and more sustainable impacts on enterprise value than activity-oriented granting. Ultimately, the study advocates for differentiating green credit into two orientation types and leveraging eco-innovation activities as credit allocation criteria to enhance the efficiency of green credit operations.