The Low-carbon city pilot policy and trade credit financing: Evidence from China

Abstract

We leverage integrated data spanning from 2007 to 2020 and employ a time-varying Difference-in-Differences (DID) approach to examine the effects of the low-carbon city pilot (LCCP) policy on trade credit financing. Our findings highlight the implementation of the LCCP policy significantly enhances the accounts payable and notes payable of enterprise, and reveals that the LCCP policy contributes to the improvement of trade credit financing through technological innovation and signal effects. These findings align with Porter Hypothesis and bring invaluable insights for policymakers in developing countries, guiding their efforts to promote sustainable economic development through environmental regulation.