Green credit and its obstacles: Evidence from China's green credit guidelines

Research output: Working paper


We find a strong and robust credit penalty effect on heavily-polluting firms of the 2012 'Green Credit Guidelines' (GCG) of China. Heavily polluting firms' access to both short-term and long-term bank credit reduces dramatically. We also find some evidence of a credit rewarding effect — heavily polluting firms continue to have access to short-term (but not long-term) bank credit after GCG if they have strong environment governance ex-ante or improve governance ex-post. Special interests associated with political connections, local aspiration to economic growth and banking business preference stifle these effects.

Bibliographical metadata

Original languageEnglish
Number of pages48
Publication statusPublished - 2021