Abstract
Roughly a decade ago, the Chinese government implemented a green credit policy aimed at lowering emissions from highly polluting corporations through improving information disclosure quality during the loan process. According to policy guidelines, banks may provide financial support only for new projects that passed an environmental assessment or were explicitly designed to decrease pollution. This paper used panel data from 320 companies in heavy polluting industries listed on the Shanghai Stock Exchange from 2008 to 2016 and adopted a fixed effects regression model to examine whether collusion between local governments and Chinese listed companies has prevented the green credit policy from achieving its target. The results show that there is no significant positive correlation between CEID and corporate green financing, which means that the environmental information disclosure system does not send valuable signals to the market and has failed to become a decision-making tool for bank-risk management.
Highlights
Corporate environmental information disclosure (CEID) and green credit policy are environmental and economic means to regulate corporate environmental behavior
The results show that there is no significant positive correlation between CEID and corporate green financing between any of the five variables, which supports a collusion model of green credit loaning. (The table of correlations is omitted with the limitation on table numbers.) Bank lending was not based on CEID, and CEID did not affect the substance of the corporate loans from the bank, either for long-term or short-term loans
The green credit policy did not achieve the expected goals of adjusting loan amount and duration or helping highly polluting corporations carry out technical transformation and industrial restructuring
Summary
Corporate environmental information disclosure (CEID) and green credit policy are environmental and economic means to regulate corporate environmental behavior. In 2007, China Environmental Protection Administration, the People’s Bank of China, and China Banking Regulatory Commission (CBRC) collectively published suggestions on the implementation of environmental protection policies and regulations against credit risk. These regulations were to strengthen credit management and support for environmental protection through the cooperation of various environmental protection departments and financial institutions. The research looks at the case of heavy polluting industries in China to see whether there is a positive relationship between CEID and corporate green financing in this environmentally-critical area
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