Abstract
How to promote technological innovation with green finance policy has been a focal topic in the global green finance field in recent years. Using the difference-in-difference approach model, this paper investigated the impact of the Green Credit Guidance (GCG) policy implemented by the Chinese government in 2012 on the technological innovation of firms in pollution-intensive industries. The empirical results indicated that GCG had a negative impact, not only on research and development (R&D) input, but also on innovation output, and the impacts on firms with different property rights and different scales were consistent. Further research showed that GCG reduced the long-term debt of firms in pollution-intensive industries, and then significantly decreased the R&D input and innovation output; that is, long-term debt is a mediator in GCG and technology innovation. The results revealed that GCG fails to promote the technological innovation of firms in pollution-intensive industries. This paper suggests that China’s green credit policy should pay more attention to the technological innovation, transformation, and upgrading of firms in pollution-intensive industries.
Highlights
Green finance is an organic combination of economic sustainable development and finance
This paper found that Green Credit Guidance (GCG) failed to improve the technological innovation of the firms in pollution-intensive industries, because financial institutions focused on their loan risk and reduce long-term loans, which led to a significant decline in the research and development (R&D) input and innovation output
The results show that the firms in pollution-intensive industries accounted for 41.28% of the total samples, and 70.83% of the samples were after the implementation of GCG
Summary
Green finance is an organic combination of economic sustainable development and finance. GCG will significantly affect the green credit of banks and other financial institutions and motivate firms in pollution-intensive industries to increase technological innovation to affect the level of their R&D investment. Whether green finance can promote the technological innovation of firms in pollution-intensive industries is still unclear, and financial institutions are unwilling to provide credit to them because of the high risk. While supporting the emerging green industries, green credit policy should improve the technological innovation of firms in pollution-intensive industries in order to realize their transformation and upgrading. This paper found that GCG failed to improve the technological innovation of the firms in pollution-intensive industries, because financial institutions focused on their loan risk and reduce long-term loans, which led to a significant decline in the R&D input and innovation output
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