Do Green Credit Policies Lead to Greener Companies?

This study examined the effect of green credit policies on company commitments to employ green management strategies. Using Shanghai and Shenzhen A-share listed company-level data from 2009 to 2015, it was found that green credit policies had a significant positive, causal effect on company green commitment. The possible underlying mechanisms through which borrowing costs affect green commitment were also explored. Further, we found that the policy effect magnitude was moderated by financing constraints and institutional environments. The green policy effect was more pronounced in non-SOEs, pilot low-carbon cities, and are with greater political pressures. The green credit policy mainly affected companies that had no previous green commitments. This paper sheds new light on the effects of green credit policies on green company behaviours