On the fast track: the benefits of ESG performance on the commercial credit financing.

Abstract

Under the sustainability strategy, a company's ability to enhance its financing capacity through improvements in environmental, social, and governance (ESG) performance is crucial for fostering high-quality development. This study empirically examines the impact of corporate ESG performance on commercial credit financing (CCF) using data from China's A-share listed companies between 2009 and 2021. The findings of the panel regression analysis revealed a significant positive correlation between a company's ESG performance and CCF. Further analysis of the influencing mechanisms indicates that a company's ESG performance can increase its likelihood of obtaining CCF by reducing environmental, social, and governance risks. Specifically, we found that ESG performance facilitates access to CCF by promoting green innovation, enhancing social reputation, and mitigating operational risk. This study expands and enriches the theory of informal financing of enterprises while incorporating the more comprehensive assessment criteria for sustainable development.