Abstract
Green credit provides capital source to business investments that directs firms to make effective use of natural resources along with other environmental agendas such as waste management, controlling pollution, restore eco-system and conserve bio-diversity. These efforts altogether help in achieving economic and environmental sustainability and social equity. Thus, the present study aspires to combine the economic and environmental aspect of green credit on the basis of green growth and sustainability criteria. The study uses the data set over the period from 2013 to 2022 and employs DID model (difference-in-difference) to investigate the influence of green credit policy on the financing decisions of firms that heavily pollute the environment. The study finds the green credit policy has significantly reduced bank loans and non-bank loans for enterprises that heavily pollute the environment. Green credit sends policy regulation signals in capital markets and this signaling effect restrains the debt and equity financing of enterprises that heavily pollute the environment because the investors in capital markets are getting aware of risks associated with polluting enterprises under the green credit policy. Green credit policy also transmits the regulating signals to supply chain financing of firms i.e., downstream and upstream trade credit, hence, restricting the commercial trade credit of polluting firms. Finally, it is observed that green-credit policies act as efficient boosters for sustainable climate quality regulation in areas where heavily polluting enterprises operate.
Similar content being viewed by others
Data availability
The data that support the findings of this study are available in the manuscript.
References
Al Mamun, A., Muniady, R., & Nasir, N. A. B. M. (2021). Effect of participation in development initiatives on competitive advantages, performance, and sustainability of micro-enterprises in Malaysia. Contemporary Economics, 15(2), 122–138.
An, S., Li, B., Song, D., & Chen, X. (2021). Green credit financing versus trade credit financing in a supply chain with carbon emission limits. European Journal of Operational Research, 292(1), 125–142. https://doi.org/10.1016/j.ejor.2020.10.025
Bai, X., Wang, K. T., Tran, T. K., Sadiq, M., Trung, L. M., & Khudoykulov, K. (2022). Measuring China’s green economic recovery and energy environment sustainability: Econometric analysis of sustainable development goals. Economic Analysis and Policy. https://doi.org/10.1016/j.eap.2022.07.005
Bastos, R., & Pindado, J. (2013). Trade credit during a financial crisis: A panel data analysis. Journal of Business Research, 66(5), 614–620. https://doi.org/10.1016/j.jbusres.2012.03.015
Benfratello, L., Schiantarelli, F., & Sembenelli, A. (2008). Banks and innovation: Microeconometric evidence on Italian firms. Journal of Financial Economics, 90(2), 197–217. https://doi.org/10.1016/j.jfineco.2008.01.001
Bertrand, M., Duflo, E., & Mullainathan, S. (2004). How much should we trust differences-in-differences estimates? The Quarterly Journal of Economics, 119(1), 249–275.
Bouraima, M. B., Stević, Ž, Tanackov, I., & Qiu, Y. (2021). Assessing the performance of Sub-Saharan African (SSA) railways based on an integrated Entropy-MARCOS approach. Operational Research in Engineering Sciences: Theory and Applications, 4(2), 13–35.
Campello, M., Giambona, E., Graham, J. R., & Harvey, C. R. (2011). Liquidity management and corporate investment during a financial crisis. The Review of Financial Studies, 24(6), 1944–1979. https://doi.org/10.1093/rfs/hhq131
Cao, E., Du, L., & Ruan, J. (2019). Lingxia Du and Junhu Ruan, “Financing preferences and performance for an emission-dependent supply chain: Supplier vs. bank.” International Journal of Production Economics, 208, 383–399. https://doi.org/10.1016/j.ijpe.2018.08.001
Chai, S., Zhang, K., Wei, W., Ma, W., & Abedin, M. Z. (2022). The impact of green credit policy on enterprises’ financing behavior: Evidence from Chinese heavily-polluting listed companies. Journal of Cleaner Production, 363, 132458. https://doi.org/10.1016/j.jclepro.2022.132458
Chang, K., Zeng, Y., Wang, W., & Wu, X. (2019). The effects of credit policy and financial constraints on tangible and research & development investment: Firm-level evidence from China’s renewable energy industry. Energy Policy, 130, 438–447. https://doi.org/10.1016/j.enpol.2019.04.005
Chau, K. Y., Lin, C. H., Tufail, B., Tran, T. K., Van, L., & Nguyen, T. T. H. (2022). Impact of eco-innovation and sustainable tourism growth on the environmental degradation: The case of China. Economic Research-Ekonomska Istraživanja. https://doi.org/10.1080/1331677X.2022.2150258
Chen, X. (2015). A model of trade credit in a capital-constrained distribution channel. International Journal of Production Economics, 159, 347–357. https://doi.org/10.1016/j.ijpe.2014.05.001
Chetty, R., Looney, A., & Kroft, K. (2009). Salience and taxation: Theory and evidence. American Economic Review, 99(4), 1145–1177. https://doi.org/10.1257/aer.99.4.1145
Chien, F. (2023). The impact of green investment, eco-innovation, and financial inclusion on sustainable development: Evidence from China. Engineering Economics, 34(1), 17–31.
Chien, F., Ajaz, T., Andlib, Z., Chau, K. Y., Ahmad, P., & Sharif, A. (2021). The role of technology innovation, renewable energy and globalization in reducing environmental degradation in Pakistan: A step towards sustainable environment. Renewable Energy, 177, 308–317.
Chien, F., Hsu, C. C., Andlib, Z., Shah, M. I., Ajaz, T., & Genie, M. G. (2022). The role of solar energy and eco-innovation in reducing environmental degradation in China: Evidence from QARDL approach. Integrated Environmental Assessment and Management, 18(2), 555–571.
Cole, M. A., & Elliott, R. J. (2005). FDI and the capital intensity of “dirty” sectors: a missing piece of the pollution haven puzzle. Review of Development Economics, 9(4), 530–548. https://doi.org/10.1111/j.1467-9361.2005.00292.x
Cui, X., Wang, P., Sensoy, A., Nguyen, D. K., & Pan, Y. (2022). Green credit policy and corporate productivity: Evidence from a quasi-natural experiment in China. Technological Forecasting and Social Change, 177, 121516. https://doi.org/10.1016/j.techfore.2022.121516
Demirguc-Kunt, A., & Maksimovic, V. (1998). Law, finance, and firm growth. The Journal of Finance, 53(6), 2107–2137. https://doi.org/10.1111/0022-1082.00084
Eiler, L. A., Miranda-Lopez, J., & Tama-Sweet, I. (2015). The impact of accounting disclosures and the regulatory environment on the information content of earnings announcements. The International Journal of Accounting, 50(2), 142–169.
Ferrara, E. L., Chong, A., & Duryea, S. (2012). Soap operas and fertility: Evidence from Brazil. American Economic Journal: Applied Economics, 4(4), 1–31. https://doi.org/10.1257/app.4.4.1
Gao, Y. (2022). Green credit policy and trade credit: Evidence from a quasi-natural experiment. Finance Research Letters, 50, 103301. https://doi.org/10.1016/j.frl.2022.103301
Ge, Y., & Zhu, Y. (2022). Boosting green recovery: Green credit policy in heavily polluted industries and stock price crash risk. Resources Policy, 79, 103058. https://doi.org/10.1016/j.resourpol.2022.103058
Guo, J., & Fang, Y. (2022). Green credit, financing structure and enterprise environmental investment. The Journal of World Economy., 45(8), 57–80. https://doi.org/10.19985/j.cnki.cassjwe.2022.08.008
Hao, Y., Ba, N., Ren, S., & Wu, H. (2021). How does international technology spillover affect China’s carbon emissions? A new perspective through intellectual property protection. Sustainable Production and Consumption, 25, 577–590. https://doi.org/10.1016/j.spc.2020.12.008
Hartani, N. H., Haron, N., & Tajuddin, N. I. I. (2021). The impact of strategic alignment on the sustainable competitive advantages: Mediating role of it implementation success and it managerial resource. International Journal of eBusiness and eGovernment Studies, 13(1), 78–96.
He, L. Y., & Liu, L. (2018). Stand by or follow? Responsibility diffusion effects and green credit. Emerging Markets Finance and Trade, 54(8), 1740–1760. https://doi.org/10.1080/1540496X.2018.1430566
He, L., Zhang, L., Zhong, Z., Wang, D., & Wang, F. (2019). Green credit, renewable energy investment and green economy development: Empirical analysis based on 150 listed companies of China. Journal of Cleaner Production, 208, 363–372. https://doi.org/10.1016/j.jclepro.2018.10.119
Hu, G., Wang, X., & Wang, Y. (2021). Can the green credit policy stimulate green innovation in heavily polluting enterprises? Evidence from a quasi-natural experiment in China. Energy Economics, 98, 105134. https://doi.org/10.1016/j.eneco.2021.105134
Huang, L., Ying, Q., Yang, S., & Hassan, H. (2019). Trade credit financing and sustainable growth of firms: Empirical evidence from China. Sustainability, 11(4), 1032. https://doi.org/10.3390/su11041032.Article1032
Hussain, H. I., Kamarudin, F., Anwar, N. A. M., Ali, M., Turner, J. J., & Somasundram, S. A. (2023). Does income inequality influence the role of a sharing economy in promoting sustainable economic growth? Fresh evidence from emerging markets. Journal of Innovation & Knowledge, 8(2), 100348.
Islam, M. M., Irfan, M., Shahbaz, M., & Vo, X. V. (2022). Renewable and non-renewable energy consumption in Bangladesh: The relative influencing profiles of economic factors, urbanization, physical infrastructure and institutional quality. Renewable Energy, 184, 1130–1149. https://doi.org/10.1016/j.renene.2021.12.020
Jermsittiparsert, K. (2021). Linkage between energy consumption, natural environment pollution, and public health dynamics in ASEAN. International Journal of Economics and Finance Studies, 13(2), 1–21.
Jiang, P., Jiang, H., & Wu, J. (2022). Is inhibition of financialization the sub-effect of the green credit policy? Evidence from China. Finance Research Letters, 47, 102737. https://doi.org/10.1016/j.frl.2022.102737
**liang, W., Chau, K. Y., Baei, F., Moslehpour, M., Nguyen, K. L., & Nguyen, T. T. H. (2023). Integrated perspective of eco-innovation, green branding, and sustainable product: a case of an emerging economy. Economic Research-Ekonomska Istraživanja, 36(3), 2196690.
Khattak, M. A., Ali, M., Azmi, W., & Rizvi, S. A. R. (2023). Digital transformation, diversification and stability: What do we know about banks? Economic Analysis and Policy, 78, 122–132.
Khoma, N., & Vdovychyn, I. (2021). Universal basic income as a form of social contract: Assessment of the prospects of institutionalisation. Przestrzeń Społeczna, 1(1/2021 (21)).
Li, R., & Chen, Y. (2022). The influence of a green credit policy on the transformation and upgrading of heavily polluting enterprises: A diversification perspective. Economic Analysis and Policy, 74, 539–552. https://doi.org/10.1016/j.eap.2022.03.009
Li, X., Ozturk, I., Ullah, S., Andlib, Z., & Hafeez, M. (2022). Can top-pollutant economies shift some burden through insurance sector development for sustainable development? Economic Analysis and Policy, 74, 326–336.
Li, L., Qiu, L., Xu, F., & Zheng, X. (2023). The impact of green credit on firms’ green investment efficiency: Evidence from China. Pacific-Basin Finance Journal, 79, 101995. https://doi.org/10.1016/j.pacfin.2023.101995
Lian, L. (2015). Does green credit affect the cost of debt financing—Comparative study on green enterprises and “two high” enterprises. Res. Financ. Econ, 30, 83–93.
Liang, J., Irfan, M., Ikram, M., & Zimon, D. (2022). Evaluating natural resources volatility in an emerging economy: The influence of solar energy development barriers. Resources Policy, 78, 102858. https://doi.org/10.1016/j.resourpol.2022.102858.Article102858
Lin, B., & Zhang, A. (2023). Can government environmental regulation promote low-carbon development in heavy polluting industries? Evidence from China’s new environmental protection law. Environmental Impact Assessment Review, 99, 106991. https://doi.org/10.1016/j.eiar.2022.106991
Lin, C. Y., Chau, K. Y., Tran, T. K., Sadiq, M., Van, L., & Phan, T. T. H. (2022). Development of renewable energy resources by green finance, volatility and risk: Empirical evidence from China. Renewable Energy. https://doi.org/10.1016/j.renene.2022.10.086
Liu, J. Y., **a, Y., Fan, Y., Lin, S. M., & Wu, J. (2017). Assessment of a green credit policy aimed at energy-intensive industries in China based on a financial CGE model. Journal of Cleaner Production, 163, 293–302. https://doi.org/10.1016/j.jclepro.2015.10.111
Liu, X., Wang, E., & Cai, D. (2019). Green credit policy, property rights and debt financing: Quasi-natural experimental evidence from China. Finance Research Letters, 29, 129–135. https://doi.org/10.1016/j.frl.2019.03.014
Meltzer, A. H. (1960). Mercantile credit, monetary policy, and size of firms. The Review of Economics and Statistics, 42(4), 429–437.
Modigliani, F., & Miller, M. H. (1958). The cost of capital, corporation finance and the theory of investment. The American Economic Review, 48(3), 261–297.
Moslehpour, M., Aldeehani, T. M., Sibghatullah, A., Tai, T. D., Phan, T. T. H., & Ngo, T. Q. (2023). Dynamic association between technological advancement, green finance, energy efficiency and sustainable development: evidence from Vietnam. Economic Research-Ekonomska Istraživanja, 36(3), 2190796.
Ojogiwa, O. T. (2021). The crux of strategic leadership for a transformed public sector management in Nigeria. International Journal of Business and Management Studies, 13(1), 83–96.
Qi, C. (2019). Has China’s green credit policy been implemented? An analysis of loan scale and costs based on “Two Highs and One Surplus” enterprises. Contemporary Finance & Economics, 03, 1.
Sadiq, M., Moslehpour, M., Qiu, R., Hieu, V. M., Duong, K. D., & Ngo, T. Q. (2023). Sharing economy benefits and sustainable development goals: Empirical evidence from the transportation industry of Vietnam. Journal of Innovation & Knowledge. https://doi.org/10.1016/j.jik.2022.100290
Shahid, M. N. (2022). COVID-19 and adaptive behavior of returns: evidence from commodity markets. Humanities and Social Sciences Communications, 9(1), 1–15.
Shahid, M. N., & Sattar, A. (2017). Behavior of calendar anomalies, market conditions and adaptive market hypothesis: Evidence from Pakistan stock exchange. Pakistan Journal of Commerce and Social Sciences (PJCSS), 11(2), 471–504.
Shahid, M. N., Siddiqui, M. A., Qureshi, M. H., & Ahmad, F. (2018). Corporate governance and its impact on firm’s performance: Evidence from cement industry of Pakistan. Journal of Applied Environmental and Biological Sciences, 8(1), 35–41.
Shahid, M. N., Islam, M. U., Alam, N., & Ali, M. (2022). Time-Varying Return Predictability and Adaptive Behavior in The US Commodity Markets During COVID-19. International Journal of Economics & Management, 16, 59–80.
Shahid, M. N., Azmi, W., Ali, M., Islam, M. U., & Rizvi, S. A. R. (2023). Uncovering risk transmission between socially responsible investments, alternative energy investments and the implied volatility of major commodities. Energy Economics, 120, 106634.
Shahid, M. N. (2019). Behavior of Stock Return, Calendar Effects and Adaptive Market Hypothesis (AHM): Evidence from Pakistan by Using Historic data with Special Focus on Gregorian and Islamic Calendar. Ph.D. Thesis
Shao, H., Wang, Y., Wang, Y., & Li, Y. (2022). Green credit policy and stock price crash risk of heavily polluting enterprises: Evidence from China. Economic Analysis and Policy, 75, 271–287. https://doi.org/10.1016/j.eap.2022.05.007
Shi, J., Yu, C., Li, Y., & Wang, T. (2022). Does green financial policy affect debt-financing cost of heavy-polluting enterprises? An empirical evidence based on Chinese pilot zones for green finance reform and innovations. Technological Forecasting and Social Change, 179, 121678. https://doi.org/10.1016/j.techfore.2022.121678
Shibli, R., Saifan, S., Ab Yajid, M. S., & Khatibi, A. (2021). Mediating Role of Entrepreneurial Marketing Between Green Marketing and Green Management in Predicting Sustainable Performance in Malaysia’s Organic Agriculture Sector. AgBioforum, 23(2), 37–49.
Sohail, M. T., Majeed, M. T., Shaikh, P. A., & Andlib, Z. (2022). Environmental costs of political instability in Pakistan: policy options for clean energy consumption and environment. Environmental Science and Pollution Research, 29, 25184–25193.
Su, D. W., & Lian, L. L. (2018). Does green credit affect the investment and financing behavior of heavily polluting enterprises. J. Financial Research, 12, 123–137.
Sun, Y., Yesilada, F., Andlib, Z., & Ajaz, T. (2021). The role of eco-innovation and globalization towards carbon neutrality in the USA. Journal of Environmental Management, 299, 113568.
Sun, Y., Li, H., Andlib, Z., & Genie, M. G. (2022). How do renewable energy and urbanization cause carbon emissions? Evidence from advanced panel estimation techniques. Renewable Energy, 185, 996–1005.
Tian, C., Li, X., **ao, L., & Zhu, B. (2022). Exploring the impact of green credit policy on green transformation of heavy polluting industries. Journal of Cleaner Production, 335, 130257. https://doi.org/10.1016/j.jclepro.2021.130257
Vu, T. L., Paramaiah, C., Tufail, B., Nawaz, M. A., Xuyen, N. T. M., & Huy, P. Q. (2023). Effect of financial inclusion, eco-innovation, globalization, and sustainable economic growth on ecological footprint. Engineering Economics, 34(1), 46–60.
Wang, K., Zhao, R., & Peng, J. (2018). Trade credit contracting under asymmetric credit default risk: Screening, checking or insurance. European Journal of Operational Research, 266(2), 554–568. https://doi.org/10.1016/j.ejor.2017.10.004
Wang, L., & Zhu, Y. (2017). Green credit policy and the maturity of corporate debt. In Proceedings of the Tenth International Conference on Management Science and Engineering Management (pp. 1709–1717). Springer Singapore.
Wirsbinna, A., & Grega, L. (2021). Assessment of economic benefits of smart city initiatives. Cuadernos De Economía, 44(126), 45–56.
**ng, C., Zhang, Y., & Tripe, D. (2021). Green credit policy and corporate access to bank loans in China: The role of environmental disclosure and green innovation. International Review of Financial Analysis, 77, 101838. https://doi.org/10.1016/j.irfa.2021.101838
Xu, X., & Li, J. (2020). Asymmetric impacts of the policy and development of green credit on the debt financing cost and maturity of different types of enterprises in China. Journal of Cleaner Production, 264, 121574. https://doi.org/10.1016/j.jclepro.2020.121574
Yao, W., Zhang, L., & Hu, J. (2020). Does having a semimandatory dividend policy enhance investor confidence? Research on Dividend-Financing Behavior. Economic Systems, 44(4), 100812.
Yao, S., Pan, Y., Sensoy, A., Uddin, G. S., & Cheng, F. (2021). Green credit policy and firm performance: What we learn from China. Energy Economics, 101, 105415.
Yu, C., Moslehpour, M., Tran, T. K., Trung, L. M., Ou, J. P., & Tien, N. H. (2023). Impact of non-renewable energy and natural resources on economic recovery: Empirical evidence from selected develo** economies. Resources Policy, 80, 103221.
Yuan, N., & Gao, Y. (2022). Does green credit policy impact corporate cash holdings? Pacific-Basin Finance Journal, 75, 101850. https://doi.org/10.1016/j.pacfin.2022.101850
Zhang, D., & Kong, Q. (2022). Credit policy, uncertainty, and firm R&D investment: A quasi-natural experiment based on the Green Credit Guidelines. Pacific-Basin Finance Journal, 73, 101751. https://doi.org/10.1016/j.pacfin.2022.101751
Zhang, B., & Qi, R. (2021). Transportation infrastructure, innovation capability, and urban economic development. Transformations in Business & Economics, 20, 526–545.
Zhang, A., Deng, R., & Wu, Y. (2022a). Does the green credit policy reduce the carbon emission intensity of heavily polluting industries?Evidence from China’s industrial sectors. Journal of Environmental Management, 311, 114815. https://doi.org/10.1016/j.jenvman.2022.114815
Zhang, M., Zhang, X., Song, Y., & Zhu, J. (2022b). Exploring the impact of green credit policies on corporate financing costs based on the data of Chinese A-share listed companies from 2008 to 2019. Journal of Cleaner Production, 375, 134012. https://doi.org/10.1016/j.jclepro.2022.134012
Zhang, M., Wang, A., & Zhou, S. (2023a). Effect of analysts’ earnings pressure on environmental information disclosure of firms: Can corporate governance alleviate the earnings obsession? Borsa Istanbul Review, 23(2), 495–515. https://doi.org/10.1016/j.bir.2022.12.001
Zhang, Y., Li, L., Sadiq, M., & Chien, F. (2023b). The impact of non-renewable energy production and energy usage on carbon emissions: Evidence from China. Energy & Environment. https://doi.org/10.1177/0958305X221150432
Zhang, Y., Li, L., Sadiq, M., & Chien, F. S. (2023c). Impact of a sharing economy on sustainable development and energy efficiency: Evidence from the top ten Asian economies. Journal of Innovation & Knowledge. https://doi.org/10.1016/j.jik.2023.100320
Zheng, S., Zhang, X., & Wang, H. (2023). Green credit policy and the stock price synchronicity of heavily polluting enterprises. Economic Analysis and Policy, 77, 251–264. https://doi.org/10.1016/j.eap.2022.11.011
Zhou, Y. W., Cao, B., Zhong, Y., & Wu, Y. (2017). Optimal advertising/ordering policy and finance mode selection for a capital-constrained retailer with stochastic demand. Journal of the Operational Research Society, 68, 1620–1632. https://doi.org/10.1057/s41274-016-0161-8
Author information
Authors and Affiliations
Corresponding author
Ethics declarations
Conflict of interest
It is declared that there is no conflict of interest.
Additional information
Publisher's Note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Rights and permissions
Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.
About this article
Cite this article
Chen, CW., Zheng, J., Chang, TC. et al. Green finance policy and heavy pollution enterprises: a supply-chain and signal transmission of green credit policy for the environment—Vietnam perspective. Environ Dev Sustain (2023). https://doi.org/10.1007/s10668-023-03967-7
Received:
Accepted:
Published:
DOI: https://doi.org/10.1007/s10668-023-03967-7