Environmental Regulation Intensity Research Articles

Green credit policy, government subsidy, and enterprises "shifting from virtual to real".

Taking the green credit policy in 2012 as a quasi-natural experiment, this paper uses the difference-in-differences method to explore the impact of green credit policy on enterprises' financial asset allocation and the moderating effect of government subsidy. We find that green credit policy significantly promotes the financial asset allocation of heavy-polluting enterprises, which is mainly reflected in short-term liquid financial investment, thus supporting the precautionary motivation of holding financial assets. The mechanism analysis shows that green credit policy promotes the financial asset allocation of heavy-polluting enterprises by reducing the scale of debt financing and increasing the financing cost. Government subsidy can significantly weaken the promoting effect of green credit policy on enterprises' financial asset allocation, and there is heterogeneity due to the regional environmental regulation intensity and financial development level. Further analysis shows that the negative moderating effect of government subsidy on green credit policy and enterprises' financial asset allocation significantly promotes the "shifting form virtual to real" of heavy polluting enterprises by reducing financial asset allocation. This paper discusses the impact of green credit policy on financial asset allocation of heavy-polluting enterprises in China and further clarifies the significant role of government subsidy in the process, so as to provide suggestions for government to control the "shifting from real to virtual" of enterprises. The results also provide an important reference for countries, especially developing countries, to implement green credit policy and government subsidy to achieve sustainable economic development.

Impact of environmental regulation intensity on the efficiency of sustainable economic growth in the European Union

Environmental pollution is an essential constraint to the sustainable growth of regional economy. This paper uses the super efficiency slacks-based measure data envelopment analysis (SBM-DEA) model to measure the efficiency of sustainable economic growth (ESEG) in the European Union (EU) and applies the spatial econometric model to explore the impact of environmental regulation intensity (ERI) on ESEG in the EU. The results show that the ESEG in the EU shows an N-shaped growth trend and the spatial pattern of “Western Europe > Eastern Europe > Central Europe > Northern Europe > Southern Europe” from 2001 to 2019. The impact of ERI on the ESEG in the EU presents a “U" shape, indicating that increasing ERI first reduces ESGE, and after reaching the turning point of ESGE, continuing to increase ERI will promote ESGE. Further analysis shows the ERI have spatial spillover effect on the ESEG, while the spatial spillover effect in the eastern and western regions of the EU is different. Improving the ERI in the western region is not only conducive to the ESEG of the country but also has a positive spillover effect on neighboring countries. However, the spatial agglomeration effect in the eastern region is not significant. In addition to environmental regulation, labor & capital structure, research and development (R&D) expenditure, GDP per capita and trade value have a significant impact on the ESGE of a country and neighboring countries.

Does environmental regulation limit the income growth of Chinese migrant population? Empirical evidence from the CHIPS

It is a controversial question of whether environmental regulation can achieve the double dividend of improving environmental quality and increasing employment and income. This paper takes Chinese migrant population as the main research object and uses the Chinese Household Income Projects data (CHIPS) and the emission data of major pollutants at the prefecture-level city jointly. Based on the classic Mincer wage equation, we investigate the impact and mechanisms of environmental regulation on the income of Chinese migrant population. The results show that: (1) The intensity of environmental regulation significantly improves the income level of the migrant population, and for every 1% increase in the intensity of environmental regulation, the wage income of the mobile population will rise by 4.96%. (2) The documented positive effect of environmental regulation is more significant in non-public firms, the eastern regions and high-skilled workers. Conversely, for the female and elderly group, 1% increase in environmental regulations will restrain their income growth by 4.95% and 0.37%, respectively. (3) The influencing mechanisms include both the direct effect of labor demand and the indirect effects of firm performance and technological innovation. (4) we find that 1% increase in environmental regulations respectively raise the income of the low- and moderate-income migrant population by 10.834% and 3.579%, while having no significant impact on the high-income group, thus reducing the income gap of the migrant population. The findings of this paper provide theoretical support and practical evidence for achieving a coordinated development of ecological environmental protection and income improvement for socially disadvantaged groups in China.

The performance of companies under environmental regulation stress: a perspective from idiosyncratic risk

ABSTRACT Using the data of 3319 Chinese listed companies from 2007 to 2019, this study examines how companies performed under the stress of regional environmental regulations. We discover that increased regional environmental regulation intensity efficiently lowers companies’ idiosyncratic risk with empirical process. This result proves that environmental regulation pressure could bring unexpected benefits to business situation of companies, which is reconfirmed through several robustness tests. The mechanism analysis further demonstrates that internal governance, rather than managerial shortsightedness and added environmental investment, strengthens the benefits, among internal factors. Moreover, this relationship is more noticeable for non-energy and non-state-owned firms, while linkages with bank or government are found to be ineffective on this issue. The R&D investment of local companies above designated size performs better than other two external factors (regional legal governance, investment on technology and education). Our study verifies an unattended role of environmental regulation on the companies’ idiosyncratic risk, revealing that the environmental initiatives of regional governments do not always adversely affect local companies. Our study could facilitate the strategic arrangements of policymakers, businesses, investors, and other stakeholders

The impact of green credit on green transformation of heavily polluting enterprises: Reverse forcing or forward pushing?

Promoting green transformation through green financial instruments has gradually become a necessary means for heavily polluting enterprises (HPEs) to promote sustainable development. This study matches the “Green Credit Statistical System” with the annual reports of China's A-share listed enterprises, identifies enterprises supported and unsupported by green credit policy (GCP) from HPEs. It uses panel data for 2009–2020 and DID model to examine the impact of GCP on enterprise transformation. The research results show that GCP significantly promotes the green transformation of HPEs. In green credit enterprises, increasing corporate bank loans, promoting technological innovation, and increasing environmental protection spending are the main influencing channels to positively promote enterprise transformation. In nongreen credit enterprises, restricting bank loans, improving financing constraints on enterprises, and increasing information disclosure are the main influencing channels to reverse force enterprise transformation. In addition, for green credit enterprises, policies are more significant in the energy and metal industries, regions with high degree of marketization and energy intensity. For nongreen credit enterprises, policies are more significant in the manufacturing industry, areas with high degree of environmental regulation intensity and marketization.

Environmental regulation and green transition: Quasi-natural experiment from China's efforts in sulfur dioxide emissions control

Exploiting the target-based pollutant emissions abatement policy imposed on the Two Control Zones in the post-2000 period as an exogenous shock to the strengthening of environmental regulation, we empirically investigate its causal effect on the green transformation of Chinese manufacturing enterprises with the difference-in-differences identification strategy. The empirical results show that the target-based pollutant emissions abatement policy for the Two Control Zones in the post-2000 period effectively binds regulated enterprises’ sulfur dioxide emissions behavior and lowers their sulfur dioxide emissions intensity, indicating that strict environmental regulation contributes to the green transition of enterprises. To avoid the self-selection bias, we re-evaluate the green transition effect of the target-based pollutant emissions abatement policy by employing the propensity score matching with the difference-in-differences technique. Our finding that strict environmental regulation facilitates the green transition of enterprises still holds. Our heterogeneity analyses reveal that enterprises exposed to greater environmental regulation intensity experience a larger reduction in their pollution emissions intensity. State-owned enterprises and those with higher production efficiency are more inclined to achieve green transition under environmental protection pressure. Further mechanism checks confirm that enterprises reduce pollution emissions intensity by upgrading pro-environmental technology rather than increasing expenditure on pollution abatement facilities.

Will emission reduction commitments hedge the carbon risk premium?

Under the goal of “carbon peaking” and “carbon neutrality” in China, it is significant to explore whether emission reduction commitments contribute to carbon risk premium. Therefore, based on a sample of Chinese listed companies that publicly disclosed questionnaires in the CDP from 2009 to 2021, this paper empirically examines the relationship between emission reduction commitments and carbon risk premium and their formation mechanism. The results show that emission reduction commitments can effectively hedge the carbon risk premium, which pass several robustness tests. Specifically, the more comprehensive and ambitious the commitment is, the greater the suppression of the carbon risk premium. The mechanism test shows that disclosing emission reduction commitment information can reduce carbon risk by improving investor confidence and attracting political resources. Differences in enterprise emission levels, regional environmental regulation intensity and green financial development result in different risk-hedging effects of emission reduction commitments. Moreover, the greater the substantial pressure from stakeholders, the greater the tendency for firms to set up emission reduction commitments. Finally, the heterogeneity analysis reveals that confidence level of commitments has a significant impact on risk premium. Specifically, enterprises with SBTi validation, higher CDP ratings and higher target completion are more helpful in curbing carbon risk premium. Our findings contribute to corporate commitment to climate change and complement the carbon risk premium hypothesis.

Environmental Regulation and Urban Land Green Use Efficiency: China as Case Study

China's economy has shifted from high-speed growth to high-quality development, and the constraints of high consumption, high pollution, and low efficiency in urban land use on sustainable urban economic development have gradually emerged. In the process of urban land resources development, it is urgent to get rid of the traditional “sloppy” utilization method and shift to the green utilization of urban land with low consumption, low pollution, and high efficiency, which can adapt to the requirements of economic and social development in the new era. Based on this, this paper investigates the effect of environmental regulations (ER) on urban land green use efficiency (ULGUE) by using SBM model, two-way stationary panel regression and threshold regression model. The results show that: (1) The connection between ER and ULGUE is strongly U-shaped. (2) Within the bounds of land use structure optimization effect, technology innovation effect, industrial structure optimization and upgrading effect, ER significantly impacts ULGUE. Still, its threshold impact coefficient has a gradient-decreasing characteristic. (3) In the heterogeneity analysis, the effect of ER on ULGUE is more evident in eastern cities, low-pollution cities, Type II, and large cities of Type I scale. Hence, in order to maximize the effectiveness of land use, it is essential to understand the environmental restrictions that cover a realistic spectrum, play the interactive and synergistic role of "combination box", and adjust the intensity of dominant environmental regulations dynamically and flexibly according to the time and place.

Does emission trading system improve the urban land green use efficiency? Empirical evidence from Chinese cities.

Maximizing socioeconomic and environmental benefits with minimal investment in urban land resources is a key concern for sustainable urban development. The emission trading system is an important strategy of the Chinese government to control environmental pollution and promote green development, but whether it improves urban land green use efficiency is still unclear. Combining the concept of green development with urban land use efficiency, this paper uses the super-efficiency slack-based measure (SBM) model with undesirable outputs to measure the land green use efficiency of 261 prefecture-level cities in China from 2003 to 2017. In addition, the propensity score matching difference-in-differences (PSM-DID) method and the mediating effect model were used to test the impact of the China's emission trading system on urban land green use efficiency and behind the mechanism. According to the findings, China's emission trading system has significantly improved urban land green use efficiency, compared with that in nonpilot cities, urban land green use efficiency in pilot cities has increased by 10.40%. Moreover, the policy effect of the emission trading system is more significant in resource-based cities and cities with a high intensity of environmental regulations. Further mechanism analysis reveals that green technology innovation and industrial structure upgrading are effective transmission mechanisms for China's emissions trading policy to improve urban land green use efficiency. The findings provide policy implications for promoting the sustainable use of urban land resources and advancing the coordinated development of urban socioeconomic and ecological environments.

What Information Do We Have on the Government's Environmental Management?

As one of the important pillars of China's industrial sector, the mining industry is critical to China's modernization and energy security. Based on China's provincial panel data, this paper collects the information on government's environmental management and estimates the impact of environmental regulation on China's mining industry's energy and carbon performance. The study further collects information on the industries' technological innovation and analyzes the technological innovation's moderating effect on environmental regulation. The research results indicate that the interconnection between the intensity of environmental regulations and the energy and carbon performance of the mining industry is inverted U-shaped, and mining enterprises with high levels of technological innovation have better adaptability when facing pressure from external environmental regulations. Regarding policy recommendations, it is imperative that the government should enhance the environmental policy framework, develop clean energy, and incentivize mining firms to advance technological innovation.

Abundance of natural resources, government scale and green economic growth: An empirical study on urban resource curse

Based on panel data of Chinese cities in 2000–2020, this study analyzed the impact of natural resources abundance on green economic growth at the urban level, and also examined the mediated effect of government scale. The findings of the study reveal that: The “resource curse” phenomenon in China's various cities is significant. The relationship between environmental regulation intensity and green economic growth presented as “U-shaped curve”. The impeding effect of industrial structure, as well as the promoting effect of factors such as economic openness level, technical innovation and physical capital investment on the development of green economy were significant. However, the marketization level and education level did not show significant impact on green economic growth. Natural resources abundance can produce “curse” effect on green economic growth by promoting the expansion of government expenditure scale and government personnel scale. Government institutional reform policies can effectively alleviate the “resource curse” phenomenon in various cities. Therefore, this study argued that optimizing the government internal expenditure structure, reshaping the political incentive structure and reducing administrative regulations in the natural resources industries were effective ways to optimize the government expenditure scale and alleviate the urban “resource curse”. Scientifically determining the government personnel scale, reducing the scope and intensity of government intervention, and fully leveraging the public's social supervision function were effective ways to optimize the government personnel scale and alleviate the “Resource curse” of cities.

Impact of technological innovation on agricultural green total factor productivity in China: considering the threshold effect of environmental regulation

Based on the panel data for 30 provinces in China from 2004 to 2020, this study explores the impact of technological innovation and environmental regulation on agricultural green total factor productivity by using the dynamic spatial Durbin panel model and the spatial panel threshold regression model. The results show that technological innovation significantly contributes to the improvement of AGTFP. Such positive impact is derived from the direct effect of technological innovation within the local province and the spatial spillover effect of technological innovation in neighboring provinces. Additionally, environmental regulation has a significant double-threshold effect on the technological innovation - AGTFP relationship. Within medium-level environmental regulation, the positive impact of technological innovation on AGTFP achieves a leap forward. Therefore, technological innovation serves as a motivator of agricultural green development, and appropriate intensity of environmental regulation is recommended in the endeavor of promoting green total factor productivity by technological innovation.

The impact of land resource mismatch and environmental regulation on carbon emissions: evidence from China

Municipalities’ inefficient use of land resources may influence local carbon emissions. The spatial Durbin model is utilized for analysis to look at the direct effect of land resource mismatch on carbon emissions, as well as the spatial spillover effect. The moderating effect model and the threshold effect model are used, respectively, to investigate the moderating and threshold effects of environmental regulation in land resource mismatch affecting carbon emissions. Panel data gathered from China’s prefecture-level cities between 2011 and 2021 are the foundation for this research. The results indicate that: (1) the mismatch of land resources will significantly increase the carbon emissions of local and adjacent areas. (2) Environmental regulation has a significant negative moderating effect on local carbon emissions caused by land resource mismatch. That is, environmental regulation can improve the environmental quality brought by land resource mismatch. (3) The mismatch of land resources presents a significant threshold effect on carbon emissions. When the intensity of environmental regulation reaches a certain threshold, the positive promotion effect of land resource mismatch on carbon emissions shows a decreasing marginal effect. Therefore, the government should keep advancing land marketization reform, strengthen environmental regulation, and create an interactive mechanism for regional cooperation in pollution prevention and control to improve regional environmental quality and promote carbon emission reduction.

The Influence of Environmental Regulation on The Innovation of Heavily Polluting Enterprises

This paper selects the listed companies of heavy pollution manufacturing industry in SSE and Shenzhen Stock Exchange from 2014 to 2018 as samples, and establishes A step-by-step regression model to explore the relationship between environmental regulations, financing constraints and enterprise innovation, aiming to provide reference for the realization of green and innovative development of enterprises. The study found that the intensity of environmental regulation significantly suppresses the innovation of heavily polluting enterprises. Then the cost of environmental protection investment of enterprises will increase, which may cause the shortage of disposable funds of enterprises, which will reduce the R & D investment in the relationship between environmental regulation and enterprise innovation, indicating that part of the influence of environmental regulation on enterprise innovation is realized through financing constraints.

Foreign direct investment and pollution emissions: a perspective from heterogeneous environmental regulation

PurposeThe purpose of this study is to analyze the effect of foreign direct investment (FDI) on pollution emissions and how environmental regulation affects this relationship.Design/methodology/approachIn the empirical research, the authors selected panel data for 30 provinces in China from 2005 to 2019 as samples. First, the authors used the instrumental variable method to verify the existence of the above hypotheses in China. Then, the authors analyzed the moderating effect of different types of environmental regulations on the environmental effects of FDI. Next, in further discussion, the authors analyzed the difference between the environmental effect and the moderating effect in different time periods and regions, respectively. Finally, the authors discussed whether the different intensities of environmental regulations lead to the transfer effect of FDI in choosing investment destinations.FindingsThe result shows that FDI can help reduce pollution emissions and create a “pollution halo” effect, which is enhanced by command-and-control regulation but suppressed by market-based incentives. The heterogeneity analysis reveals that the 18th National Congress of the Communist Party has weakened the pollution halo effect of FDI, while the environmental effect of FDI in the eastern region is not significant, but in the middle and western regions, there is a significant pollution halo effect and a positive moderating effect of environmental regulations. Finally, further analysis reveals that FDI has a transfer effect under command-and-control environmental regulations.Research limitations/implicationsFirst, the main purpose of this paper is to study the relationship between FDI and pollution emissions from the perspective of heterogeneous environmental regulation. Therefore, there is no detailed discussion on their effect mechanism of them. Second, limited by data, the authors adopt the single index to measure the stringency index of command-and-control and market-based incentive environmental regulations in China. The single index may not be able to fully reflect the intensity of regional environmental regulation, so the construction of a composite indicator is necessary. These shortcomings are the focus of the authors' future research.Practical implicationsUnder the guidance of high-quality development, the conclusions above can provide reference for adjusting FDI policies and improving environmental regulation policies.Originality/valueThe innovations in this paper can be summarized as the following four dimensions: First, the authors use the instrumental variable (IV) method to address endogeneity in the relationship between FDI and pollution emission, which can further ensure the robustness of the research results and increases the credibility of the paper. Second, the authors distinguish between two types of environmental regulations to investigate their moderating effect on the environmental impact of FDI. Third, the authors consider the temporal and spatial heterogeneity of both the environmental effects of FDI and the moderating effect of regulation. Last, the authors analyze the spatial spillover of environmental regulation through the study of the transfer effect.

The impact of political competition on low-carbon technology innovation: From the perspective of officials’ personal characteristics

Political competition is reflected in the strategic interaction of regional government's behavioral motivation driven by “official tournament.” Especially since environmental protection was officially included in the official performance appraisal system in 2005, the interactive trend of local governments’ economic development and environmental protection is more obvious. The policy uncertainty caused by this interaction is a major challenge for the government to promote regional sustainable development. Different from previous studies that only focus on the impact of political competition on environmental governance, this paper studies the impact of political competition on the low-carbon technology innovation from the perspective of sustainable development. Combined with the characteristics of Provincial Party Secretaries and Provincial Governors, the influence mechanism of political competition on low-carbon technology innovation is analyzed based on the method of spatial dubin model. Firstly, it finds that political competition has a significant negative impact on low-carbon technology innovation in the region and its adjacent regions, which is mainly caused by the political competition of Provincial Governors, while the political competition of Provincial Party Secretaries has no significant impact on low-carbon technology innovation. Secondly, the results of the mediation effect test show that reducing the intensity of environmental regulation in exchange for economic growth and political promotion opportunities is one of the reasons why the political competition of Provincial Governors inhibits low-carbon technology innovation. Thirdly, the results of the heterogeneity test of official characteristics show that the age of Provincial Governors is less and the tenure is longer, the stronger the inhibiting effect of Provincial Governors’ political competition on low-carbon technology innovation is. These conclusions provide policy suggestions for enterprises to make environmental investment decisions under different political environments.

The Carbon Emission Reduction Effect of Carbon Emission Trading Policy in China

The carbon emission trading policy attributes carbon dioxide emission rights to commodities, representing an important exploration to reduce carbon emissions by the market mechanism. Since 2013, China has implemented the carbon emission trading policy. In order to study whether the carbon emission reduction effect of emission trading policy in pilot areas and what is the pathway, this paper uses multi-period difference-in-differences method and the medintion effect method. An empirical analysis of panel data from 283 prefecture-level cities in China between 2006 and 2019.The research findings demonstrate that: (1) The policy about carbon emission trading significantly reduced carbon emissions,which is still valid after a series of robustness tests, and had a synergistic effect. (2) The policy primarily promotes carbon dioxide emission reduction through innovation in green technology and adjustments in industrial structure. (3) In comparison to the eastern and western regions, the policy performs better in central regions. Furthermore, the effectiveness of emission reduction depends on the intensity of environmental regulations, thus, stricter regulations are more conducive to carbon reduction. This paper provides strong evidence to the expansion of carbon emission trading pilots, and guides the operation of carbon emission trading market in China.

The Influence of Digital Economy on the Inflow of Foreign Direct Investment

Based on the perspective of human capital and environmental regulation, the comprehensive evaluation index and environmental regulation intensity of digital economy are obtained by entropy method and comprehensive index method. Based on the panel data of prefecture-level cities from 2011 to 2018, the influence of China digital economy on foreign direct investment inflow is analyzed. The results show that the digital economy positively affects the inflow of human capital and foreign direct investment; The total effect of digital economy on FDI inflow can be divided into direct effect and intermediary effect. The direct effect of digital economy on FDI inflow is significantly positive, and human capital is the intermediary variable between digital economy and FDI inflow, and its intermediary effect is significantly negative. Environmental regulation negatively affects the inflow of foreign direct investment, and its regulatory role significantly inhibits the positive impact of digital economy on the inflow of foreign direct investment. Therefore, on the one hand, it is necessary to accelerate the high-quality development of the digital economy and actively and effectively introduce foreign capital; On the other hand, the government should implement environmental regulation policies according to local conditions, give full play to the "compensation effect" of environmental regulation, and actively introduce foreign capital inflows.

Nonlinear effect of industrial robot applications on carbon emissions: Evidence from China

In the digital age, most state-of-the-art research has investigated the influence of industrial robot applications (IRAs) on labor and income distribution, but its environmental impact remains underexplored. This paper uses regional panel data in China from 2006 to 2017 to explore the nonlinear effect of IRAs on carbon emission (CE), as well as its optimal conditions by using fixed effect model with quadratic term and threshold regression model, respectively. The results show that: (1) An inverted U-shaped relationship was verified between IRAs and CE, which means when the IRAs exceed a certain threshold, carbon emissions will be curbed. (2) IRAs accelerate the advance of the inverted U-shaped turning point by improving the factor allocation efficiency and optimizing industrial structures. (3) The CE reduction effect of IRAs depends on the scale of the highly skilled labor force, digital endowment and environmental regulation intensity in the region. These conclusions not only broaden the theoretical horizon of existing effects of IRAs in the environmental fields, but also provide practical implications to maximize the carbon reduction effect in IRAs.

Carbon Emission, Air Pollution, and Total Factor Productivity: Evidence from Prefecture-Level Cities in China

Based on the instrumental variable method and the panel data of 283 prefecture-level cities in China from 2004 to 2016, we explore the relationship between carbon emission, air pollution, and total factor productivity (TFP). The results show that: (1) Both carbon emission-induced and air pollution-induced environmental regulations positively promote TFP. For every 1% increase in the two indicators of the intensity of environmental regulation, carbon emission, and air pollution, TFP will increase by 1.7150 percentage points and 0.6366 percentage points respectively. (2) Carbon emission-induced and air pollution-induced environmental regulation have similar coefficients on TFP, indicating that the effects of the two are synergistic. Carbon emission has a greater impact on TFP, so enhancing environmental regulation on carbon emission can better promote the improvement of TFP. (3) Financial scale and government intervention have a significant intermediary effect between environmental regulation in both aspects and TFP.