The study of firm productivity with green credit policies: evidence from Chinese industrial firms

We use the 2012 Green Credit Guidelines as a quasi-natural experiment and data from A-share listed companies from 2008–2020 to examine the effect of green credit policy on firm productivity and its mechanism of action. The results show that the green credit policy significantly inhibits improvements in firm productivity. The inhibitory effect still holds after a series of robustness tests, such as the difference-in-differences propensity score matching method, placebo test, and change in the timing of policy shocks. The mechanism of action test reveals that credit resource allocation, financing constraints and business credit are important channels through which green credit policy can reduce firm productivity. The heterogeneity test reveals that the inhibitory effect of green credit policy on firms' productivity improvements in restrictive industries is more significant for private firms, smaller firms, and inland regions. The policy implication of the findings of this paper is mainly to improve the green credit policy guarantee mechanism and policy implementation using the market as the main body, with the goal of realizing the synergistic development of policy implementation and environmental protection and of promoting rational resource allocation.