Green credit and enterprise environmental and economic performance: The mediating role of eco-innovation

Abstract

In recent years, green credit has become a major policy for banking institutions to financially support the green development of enterprises. However, there has been no consensus on whether and how green credit can effectively improve enterprise performance. This study investigates the dual impact of green credit on enterprise environmental and economic performance with a conceptual framework that incorporates eco-innovation (i.e., innovation related to eco-process, eco-product, and eco-organization) as a mediator. Using the structural equation model and data from China's 376 textile manufacturing firms, this study reveals that green credit directly improved enterprise economic performance but had no significant direct effect on environmental performance. Eco-innovation showed a complete and partial mediating effect in the indirect relationships between green credit and environmental performance, and economic performance, respectively. Such a mediated path can avoid excessive green investment, alleviate financial burden, and promote the green transformation of enterprises with high pollution and high energy consumption (HH), thus contributing to the sustainable development of green credit. This study offers a valuable framework to assist business managers, bankers, and policymakers in managing green credit, strengthening eco-innovation, and improving environmental and economic performance.