The influence of a green credit policy on the transformation and upgrading of heavily polluting enterprises: A diversification perspective

Abstract

The introduction of green credit policies in the context of sustainable economic development imposes financing constraints on heavily polluting enterprises, placing greater pressure on such enterprises to transform and upgrade. This has become the external driving force behind the diversification of heavily polluting enterprises. Through a sample of listed Chinese companies from 2009 to 2015, this paper uses the implementation of the Green Credit Guidelines in 2012 as a quasi-natural experiment and constructs a difference-in-differences model. The empirical evidence shows that the implementation of this green credit policy significantly increased the tendency of heavily polluting enterprises to diversify, and this effect was more obvious among heavily polluting enterprises that are large in scale, have weak governance, are in regions with high marketization levels and whose operating units have already been involved in non-heavily polluting industries. Furthermore, this paper verifies the type and degree of the diversification of heavily polluting enterprises through logistic and Poisson regressions. The results indicate that heavily polluting enterprises tend to enter non-heavily polluting industries by means of business diversification and that this behaviour is not for speculative purposes but is rather an in-depth strategic investment. Therefore, green credit policies help propel the transformation and upgrading of heavily polluting industries.