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The effect of the policy mix of green credit and government subsidy on environmental innovation

Accepted version
Peer-reviewed

Type

Article

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Authors

Ma, Y 
Sha, Y 
Wang, Z 
Zhang, W 

Abstract

We examine to what extent ‘policy mix’ of green credit policy and government subsidy affects high-quality environmental innovation of high-polluting firms. The green credit policy is a special environmental regulation that guides the distribution of credit from banks. Using the difference-in-difference method, we find that Green Credit Guidelines (GCGs) have a negative impact on the high-quality environmental innovation of high-polluting firms in China. However, the negative relationship between GCGs and high-quality environmental innovation depends on the level of government subsidy. Subsidies can effectively correct the negative impact of GCGs. The mechanism analysis shows that GCGs hinder high-quality environmental innovation through two channels: (1) increase in compliance costs and (2) lack of long-term bank credit that supports environmental innovation. Government subsidies can play a moderating role in the second channel.

Description

Keywords

38 Economics, 35 Commerce, Management, Tourism and Services, 3507 Strategy, Management and Organisational Behaviour, 9 Industry, Innovation and Infrastructure, 12 Responsible Consumption and Production

Journal Title

Energy Economics

Conference Name

Journal ISSN

0140-9883

Volume Title

Publisher

Elsevier BV