Market-incentive environmental regulation and performance of new energy vehicle enterprises: evidence from the dual credit policy in China

Testing the implementation effect of the dual credit policy as a market-incentive environmental regulation promoting high-quality development of China's new energy vehicle industry requires examining its role in helping low-carbon emission reduction. More importantly, such development also requires exploring whether it can effectively improve the performance of new energy vehicle enterprises. This paper takes the dual credit policy in China as a quasi-natural experiment. It applies a difference-in-differences approach to empirically explore the effect and influencing mechanism of the dual credit policy on the performance of Chinese new energy vehicle enterprises using microdata of A-share listed companies from 2010 to 2021. The study found that the dual credit policy significantly affects the business and innovation performance of new energy vehicle enterprises. It further constructed the mediating effect model to test the mechanism of dual credit policy affecting enterprise performance, showing that the policy promotes enterprise performance via R&D input. In addition, the dual credit policy’s effect is heterogeneous, contributing more to developed regions and non-state-owned enterprises.