DID Model Research Articles

Carbon emissions trading, industrial structure upgrading and green development: Excess benefits of combined actions

Clarifying the influence mechanisms of carbon emissions trading scheme (ETS), industrial structure upgrading (ISU), and green development is of great theoretical and practical significance. Existing studies have only focused on the role of ETS or ISU on green development and have not included them in an analytical framework. The DID model and the moderating effect model are therefore combined in this work to to explore how the ETS will affect the link between ISU and green development throughout the period of 2008 to 2019 using panel data from 271 Chinese cities. Through a series of robustness and endogeneity tests, we find that: (1) ETS can significantly moderate the U-shaped relationship between ISU and green development, and this impact is significant in both the long and short term; (2) When ETS and ISU are implemented at the same time, the effect of the combined actions is greater than the sum of the effects of the two policies implemented separately, which means that the combined actions has excess dividends; (3) ETS and ISU have significant direct effects and spatial spillover effects on green development, and the excess dividends of combined actions also exist significantly at the spatial level. The research results of this paper provide an important theoretical and empirical basis for establishing the combined actions of ETS and ISU.

Study on the Impact of Main Functional Zoning Policies on the Economic Conversion Efficiency of Forest Ecological Capital in Hunan Province

In 2010, China promulgated the National Main Functional Area Planning (2010), marking the first national level of the national land space planning policy, the space planning is of great significance for optimizing the development model of forest ecosystems, improving the value transformation of forest ecological products, and is an important policy goal for the sustainable development of forest ecological resources. This paper analyzes the development status of the main functional zoning policy, and establishes a DID model to empirically analyze the implementation effect of the main functional zoning policy. The results show that the policy of main functional zoning will inhibit the increase of the economic conversion efficiency of forest ecological capital, and the policy effect is significant.

Does the opening of high-speed rail inhibit corporate zombification?

In the context of emphasizing economic efficiency and development quality, how to dispose of zombie enterprises has become a major challenge worldwide. This study employs a time-varying DID model to investigate the effects of high-speed rail (HSR) on corporate zombification using data from China A-share listed companies. It is found that the rollout of HSR indeed restrains corporate zombification, and this result persists after an extensive set of robustness tests. Mechanism analysis showed that the launch of HSR can inhibit corporate zombification through three mechanisms: curbing government intervention, reducing credit distortions and increasing corporate profitability. Heterogeneity analysis revealed that the inhibiting effect of HSR is more pronounced in private firms and cities with low initial transportation resource endowments. Furthermore, by decomposing the disposition of zombie enterprises into two specific paths: reviving existing zombie enterprises and inhibiting the formation of new zombie enterprises, we found that the opening of HSR has no significant effect on reviving existing zombie enterprises but has a significant effect on inhibiting the formation of new zombie enterprises, i.e., the inhibiting effect of the opening of HSR on zombie enterprises is mainly achieved through the path of inhibiting the formation of new zombie enterprises. This paper not only contributes to the literature on evaluating the economic effects of HSR, but it also provides policymakers with pertinent recommendations on how to guide zombie firms to de-zombify.

Research on the impact of carbon emission trading on GTFP

Faced with the serious environmental pollution caused by greenhouse gas emissions, the Chinese government has put forward the target of controlling greenhouse gas emissions in the 12th Five-Year Plan and adopted a series of measures. Among them, the pilot policy of carbon emission trading is an important market-oriented instrument, which aims to control carbon dioxide emissions through the market mechanism. This paper studies the impact of this policy on GTFP, using the DID model to analyze the data of 30 provinces from 2004 to 2020. The study finds that the pilot carbon emission trading policy has significantly promoted the improvement of GTFP in the pilot areas. Moreover, the impact of policies on GTFP can be realized through two mechanisms: technological innovation and industrial structure upgrading. The impact of this policy is particularly significant in the central and western regions. These conclusions are of great significance for promoting green and low-carbon transformation, reducing carbon emissions and improving relevant carbon trading policies.

Does environmental law enforcement supervision improve corporate carbon reduction performance? Evidence from environmental protection interview

In response to the challenge of carbon emissions, countries worldwide have implemented a diverse range of environmental policies. However, the inefficient implementation of these policies remains a remarkable hurdle in the process of carbon governance. Exploiting the environmental protection interview (EPI) initiated in 2014 and 2015 as a quasi-natural experiment and utilizing firm-level data from 2011 to 2018, this study investigates whether the enhanced supervision of local environmental law enforcement by the central government causes changes in corporate carbon reduction performance (CCRP) based on the Staggered DID model. We observe that EPI notably improves CCRP, and this enhancement manifests both immediately and persistently over time. Furthermore, the impact of EPI on CCRP is more pronounced among large-scale enterprises, enterprises with low financing constraints, and those with weak political affiliations. Mechanism analysis indicates that government pollution control efforts, public environmental awareness, and enterprise source control are pivotal factors that strengthen the effectiveness of EPI. This study reveals the positive effects of EPI in achieving carbon reduction goals and underscores the vital role of institutionalized law enforcement supervision mechanisms as a fundamental prerequisite for policy efficacy.

Influential factors and interventions for repeated production violations in food enterprises - Empirical evidence from China

The increasing burden of government spending on food safety regulation has been acknowledged as a common challenge faced by regulatory agencies in a multitude of countries. The Chinese government has significantly invested in food safety regulations in recent years. However, the food safety situation has not been effectively optimized, and a high proportion of food enterprises continue to have repeated food quality issues. Achieving sustainable food safety governance necessitates the attainment of dual goals: enhancing regulatory efficiency and reducing regulatory burdens. These issues have not been thoroughly investigated in the academic literature. This study aims to identify the key factors that contribute to the repeated production violations by food enterprises amid stricter regulations and to explore methods to address this issue. The study employs a Logit model to examine the pivotal factors influencing repeated production violations of food enterprises and utilizes a DID model to assess the impact of food safety regulatory information interventions on the recurrence of these violations. The study has found that: (1) The cognitive bias of food enterprises regarding the stringency of food safety inspections is a significant factor in the repeated production violation of food enterprises. Additionally, government punishment positively moderates the relationship between this cognitive bias and the occurrence of violations. (2) Interventions involving the dissemination of food safety regulatory information can effectively mitigate the recurrence of violation behaviors in food production. For each additional target of information intervention, the rate of repeated production violations by food enterprises decreases by 11.9 percentage points. The study provides theoretical substantiation and practical insights to support the Chinese government's twin objectives of improving the efficiency of food safety regulation and reducing the associated regulatory burdens.

Has the opening of high-speed railway in China promoted urban low-carbon transformation along the route: re-estimation based on staggered DID robust estimators.

Considering the opening of high-speed railway (HSR) as a quasi-natural experiment, this paper explores the emission reduction effect of HSR opening and its mechanisms and heterogeneity characteristics based on the panel data of 272 cities in China from 2006 to 2019 by staggered DID model and the mediating effect model. It is found that (1) the opening of HSR significantly reduces the carbon emission level of cities, and the conclusion still holds after controlling the endogeneity issue and a series of robustness tests; (2) Bancon decomposition and negative weight diagnostics both show that the estimated average treatment effect bias is small and the robust estimators are more robust; (3) by reducing production costs and promoting inter-regional industrial division of labor, the opening of HSR promotes intra-industrial structural transformation and inter-industrial structural transformation, respectively, thus reducing urban carbon emissions. At the same time, HSR achieves urban carbon emission reduction by promoting free movement of population and human capital agglomeration; and (4) further study finds that there is regional heterogeneity in the emission reduction effect of HSR opening, and the carbon reduction effect is mainly reflected in large and medium-sized cities, near provincial capitals, non-resource-based cities, and cities with rich educational resources, which indicates that the location of future HSR should be combined with the city's own characteristics and be tailored to the city.

Can smart cities reduce labor misallocation? Evidence from China

The marketization of factors in China lags behind that of products, and this lag is directly manifested as insufficient effective supply of labor, rising labor costs of enterprises, and serious distortion of labor resource allocation, which to a great extent restricts the economic transformation from “quantity” to the “quality” growth. The labor allocation effect of smart cities plays an important role in promoting the transformation to high-quality development in China, but there is still a lack of empirical research testing this effect. Based on panel data of 151 cities at the prefecture level and above for the period 2006–2018, this paper uses a DID model to evaluate the impact of smart city pilot projects on labor misallocation. The results show that, first, smart cities can significantly reduce labor misallocation, and this finding holds under a series of robustness tests. Second, smart cities can reduce labor misallocation through the formation of industrial agglomeration and the upgrading of the industrial structure. Third, the effect of smart cities was more significant in central and eastern cities and large-scale cities than in western cities and small and medium-scale cities. Fourth, smart cities have a significant spatial spillover effect on the reduction of labor misallocation.

Impact of Broadband China Infrastructure Strategy on Fintech: A Quasi-Natural Experiment

Fintech has made an important contribution to the inclusive and sustainable balanced development of the digital economy, and how to improve its development has become a research hotspot. This paper utilizes the Broadband China strategy approved in 2013 as the policy shock, and constructs a DID model to analyze the impact of new infrastructure construction on fintech. The study shows that new infrastructure construction is conducive to the improvement of fintech, and this impact is realized through the all-encompassing expansion of the breadth of fintech coverage and further exploration of the depth of its use. Moreover, heterogeneity studies find that the driving effect of new infrastructure construction on fintech is more prominent in eastern cities, sub-provincial cities, large-scale cities and cities with low levels of traditional infrastructure. This study not only provides evidence for assessing the policy effect of new infrastructure construction, but also provides theoretical and empirical support for how the state promotes the development of fintech, which has certain policy implications.

Can Green Finance Reform and Innovation Pilot Zones Promote the Operational Efficiency of Commercial Banks? — Empirical Research Based on 40 Commercial Banks in China

The Chinese government is placing significant emphasis on green development. From 2017 to 2021, the central and local governments in China established 9 green finance reform and innovation pilot zones in 6 provinces to explore the pillars of China’s green finance system. Although these zones and related policies have been proven advantageous for innovative manufacturing enterprises and environmental quality, the impact on commercial banks, pivotal players in China’s green finance landscape, has been understudied. This paper employs the DEA-Malmquist and DID models to investigate the impact of pilot zones on the operational efficiency of commercial banks. The results indicate that the establishment of pilot zones significantly improves banks’ operational efficiency, and the mechanisms are reducing non-performing loan rates and increasing green credit balance. In addition, state-owned banks have benefited more. Further research shows that the improvement mainly comes from increased pure technical efficiency, due to better management practices and resource utilisation. These findings can be used to evaluate the impact of the government’s green finance policy on the operation of commercial banks.

The impact of market-based environmental regulation on corporate ESG performance: A quasi-natural experiment based on China's carbon emission trading scheme

At present, there are few studies exploring the impact of market-based environmental regulation on ESG performance based on the perspective of carbon emission trading scheme (CETS). This paper aims to supplement this research field through empirical analysis. Taking Shanghai-Shenzhen A-share listed companies from 2012 to 2022 as the research object, this paper studies the impact of CETS, a market-based environmental regulation tool, on the ESG performance of enterprises by constructing a time-varying DID model and examines the mediating roles of green technology innovation, agency cost and analyst attention. The results show that the implementation of CETS can significantly boost ESG performance, and green technology innovation, agency cost, and analyst attention play a partial intermediary role between the two, while the mediating effects of green total factor productivity and green total factor energy efficiency are not significant. In terms of heterogeneity analysis, the study shows that CETS implementation has a more substantial promotion effect on ESG performance in non-state-owned enterprises, non-politically connected enterprises and non-high-tech enterprises. In this paper, the robustness test was carried out through PSM-DID, placebo test and replacement of explained variables, and the test results further supported the hypothesis in this paper. This study enriched the research on the impact of market-based environmental regulation on ESG from the perspective of CETS. It provided enlightenment for enterprises to improve ESG performance to a strategic level, improve the level of green technology innovation, and the government to implement differentiated environmental governance policies.

Does the energy-consuming right trading system promote green technology innovation of enterprises?

To achieve the high-quality economic development, China implemented the energy-consuming right trading system, aiming to leverage market-oriented environmental regulations to drive enterprises’ green transformation. The purpose of this paper is to figure out whether the energy-consuming right trading system has promoted the green technology innovation of enterprises. Using the empirical analysis method, the paper samples 718 listed industrial enterprises from 2014 to 2019 and constructs a DID model to assess the impact. The results indicate a significant promotion of green technology innovation by the trading system. Non-state-owned and non-high-energy-consuming enterprises exhibit greater sensitivity to the energy-consuming right trading system. Additionally, the institutional environment plays a regulatory role in promoting green innovation of enterprises. Furthermore, it is found that the energy-consuming right trading system influences enterprises by enhancing capital allocation efficiency. The findings are valuable for the government in shaping energy policies and fostering the green transformation of enterprises.

Will Environmental Regulations lead to China's outward Foreign Direct Investment?: A Quasi Natural Experiment Based on China's Carbon Emission Trading Pilot Policy

Foreign direct investment (OFDI) is an important part of China's "going global" strategy. With the continuous expansion and rapid development of OFDI in China, domestic environmental problems are becoming increasingly severe. Therefore, China has established a pilot policy of Carbon Emission Trading System (ETS) to address environmental issues. This article takes the implementation of ETS pilot policies as a quasi natural experiment, uses the double difference method (DID model) to empirically test whether ETS pilot policies will lead to OFDI, and uses the composite control method for robustness testing to supplement and expand the conclusions of the DID model. In addition, incorporate the "Pollution Shelter Hypothesis" and "Porter Hypothesis" into the same framework to explore the impact mechanism of ETS pilot policies on OFDI. Based on the conclusions drawn, it is recommended to further improve the design of carbon trading systems in pilot areas and establish a national carbon emission trading system to enhance the quality of China's outward foreign direct investment.

Carbon neutrality endeavors: the impact of carbon emission trading policies on total factor carbon emission efficiency.

Deepening the carbon market allocation reform is a strong support for carbon peaking and carbon neutrality. China has been piloting carbon trading in batches since 2013. However, there is little literature on whether and how carbon emission trading (CET) improves total factor carbon emission efficiency (TFCEE). To fill this gap, this study first calculates urban TFCEE using an extended Epsilon-based model and then designs a quasi-natural experiment based on causal inference. The staggered DID model is adopted to investigate the impact of CET pilot policies on urban TFCEE and its impact mechanism. Our results show that (1) the CET policy has a significant promoting effect on TFCEE in pilot cities, and this conclusion is reconfirmed by adopting robustness tests. (2) The mediating effect models are employed to confirm the mediating role of green technology innovation, industrial structure upgrading, and resource allocation efficiency in CET policy promoting regional TFCEE. (3) The heterogeneity test of CET policy depicts a considerable positive impact on TFCEE in cities with abundant resources. Eastern and developed cities are more likely to experience better carbon efficiency promotion through this policy than other cities. This study provides evidence for the important role of CET in promoting the development of a low-carbon economy and carbon neutrality.

The Role of Industrial Structure in the Impact of Environmental Regulation on Carbon Productivity

In the context of global climate change, China has proposed the "Carbon peaking and Carbon neutrality goals" goal of carbon emissions will reach carbon peak by 2030 and carbon neutral by 2060. As a market-based environmental regulation policy to promote greenhouse gas emission reduction, carbon emission trading policy is expected to reduce carbon emissions and improve carbon productivity, among which industrial structure plays a regulatory role in the impact of carbon emission trading policy on carbon productivity. Using the provincial data of China from 2006 to 2019, this paper evaluated the influence of carbon emission trading policy on carbon emission, taking the industrial structure as the regulating variable, studied the industrial structure in the influence of environmental regulation on carbon emission, and tested the regression results of DID model through parallel trend test, placebo test and PSM-DID model regression. After the above research process, the following conclusions are drawn: the carbon emission trading policy has a significant positive promotion effect on carbon emission reduction, and it is further concluded that the industrial structure has a significant negative regulatory effect on carbon productivity under the carbon emission trading policy.

Study on the impact of central environmental protection inspection on the health of the older adult population-A quasi-natural experiment in China.

In 2015, the central government of China established the Central Environmental Protection Inspection (CEPI) system for oversight of local governments. It enhanced local government enforcement of environmental regulations, which had a considerable influence on the health of the local older adult population. This study quantifies the effects of local government regulation brought about by CEPI on the health of the older adult. It examines the impact mechanism using the DID model and panel data from the China Health and Retirement Longitudinal Study (CHARLS). The results show that (1) local governments' environmental protection regulations implemented by CEPI have a positive impact on the general health of the older adult. The results of the study passed the parallel trend test, PSM test, replacement variable test, and placebo test and remained significant; (2) in terms of the impact mechanism, CEPI has promoted local governments' environmental governance initiatives, which has reduced industrial wastewater emissions, industrial sulfur dioxide emissions, and industrial fumes emissions. This has improved air quality, thereby creating a good living environment for the older adult and improving their overall health; (3) according to heterogeneity research, the health of older adult living in the Yangtze River Basin, urban older adult, and older adult without chronic diseases is more significantly affected by the environmental protection regulations of the local governments brought about by CEPI.

Green credit policy and corporate excess cash holdings.

Green credit is changing industrial structure and corporate behavior, but little attention has been paid to the relationship between green credit and corporate cash management behavior. Based on the typical fact that the allocation of traditional bank credit funds is biased towards heavily polluting industries and the exogenous impact event of green credit policy, this paper takes A-share listed companies in China's capital market from 2008 to 2015 as samples, and uses the DID model to investigate the impact of green credit policy on excess cash holdings of heavily polluting enterprises. The findings indicate that the green credit policy has reduced the excessive cash holdings of heavily polluting enterprises, suggesting that it can correct the issue and align their cash holdings with the requirements of normal production and operations. The mechanism test demonstrates that the green credit policy can alleviate agency conflicts and influence enterprise cash holdings. Moreover, a cross-sectional investigation reveals that the inhibitory effect of the green credit policy on cash holdings is more pronounced in large-scale and state-owned enterprises compared to small-scale and non-state-owned enterprises. Finally, an analysis of the economic consequences reveals that the green credit policy indirectly enhances corporate value by reducing excessive cash holdings. Based on this, banks and financial institutions continue to treat the credit granting of heavily polluting enterprises cautiously, optimize the structure of green financial products, fully consider the different types and nature of customers, and develop differentiated lending conditions and diversified evaluation mechanisms. This paper has enriched the research on the economic consequences of green credit and the influencing factors of corporate cash holdings, and provided policy enlightenment for regulators and listed companies to correctly understand and make full use of green credit policies to keep corporate cash stable through the crisis.

The effect of margin-trading and short-selling mechanism on left-tail risk: Evidence from a quasi-natural experiment in China

This research investigates the influence of a margin-trading and short-selling pilot program on the left-tail risk of equities, utilizing A-share stock data in China from January 2004 to July 2020 as a sample. By exploiting the staggered implementation of the pilot program within a difference-in-differences framework, we examine the impact of margin-trading and short-selling mechanism on left-tail risks of equities in China. Firstly, we present empirical evidence that the introduction of margin-trading and short-selling mechanism can significantly mitigate the left-tail risk for the designated stocks. In particular, the effect is mainly from short-selling activities. Secondly, the empirical evidence suggests that the presence of information asymmetry among investors plays a mediating role in the mitigating impact. Thirdly, the findings demonstrate that mitigating effect of the mechanism is particularly pronounced during periods characterized by high investor sentiment and high levels of economic policy uncertainty. Additionally, results are robust to DID models when shell value contamination is removed, an alternative time period and measure of left-tail risk are considered, and placebo tests are conducted.

The Impact of Digital Transformation on Manufacturing Enterprises Innovation


 
 
 
 With the rapid development of big data, artificial intelligence and other information technologies, the world economy is entering a new economic era driven by digital technology. Under the background of China Manufacturing 2025, the new generation of digital technology has had a fundamental impact on the reform of China's manufacturing productivity. It also provides a strong driving force for China's manufacturing industry to achieve high-quality development. At present, how to give full play to the driving role of digital innovation elements and achieve performance improvement has become a key concern of the country and enterprises. Based on the data of A-share listed manufacturing enterprises from 2007 to 2021, this paper uses multiple perspectives to measure the digital transformation of enterprises, uses the fixed effect model to verify the promotion effect of digital transformation on innovation, and further uses the multi-period DID model to verify the impact of digital transformation on the innovation performance of manufacturing enterprises through the parallel trend test. Through the empirical test, it is found that digital transformation can significantly promote the improvement of enterprise innovation performance. The research conclusions not only further enrich the relevant research on enterprise innovation under the background of digital transformation, but also provide a theoretical basis for the formulation and implementation of enterprise digital transformation strategy, have certain policy implications, and have certain reference value for manufacturing enterprises to better carry out digital transformation practice.
 
 
 

Carbon emission trading scheme and corporate financialization: Evidence from China

To achieve the carbon goals, the Chinese government initially implemented the carbon ETS in 2013 in 7 pilot provinces and cities. Using the firm-level financial and management data of the A-share listed companies in the 30 provinces of mainland China from 2008 to 2020, this paper examines the ETS impact on corporate financialization by constructing a DID model. The result supports the “crowd-out” effect that the implementation of ETS decreases corporate financialization and this negative impact is weaker on the state-owned firms, located in the eastern region of China, and are not in the manufacturing industry. These findings imply that other than the original target to reduce carbon emissions, the ETS, by its market-based nature, is effective in reducing the risk of over-financialization.