Green Credit Policy and Corporate Investment Efficiency: Evidence from China

By examining Chinese listed companies from 2007 to 2019 and finds that green credit policies significantly promote corporate investment efficiency. The results remain robust after conducting parallel trend tests, key variable substitution definitions, and placebo tests. Higher ROA, greater cash flow, and higher analyst coverage are associated with lower investment efficiency, while state-owned enterprises exhibit higher investment efficiency. The mechanisms through which green credit policies affect investment efficiency include cash holdings, agency issues, female executives, investment opportunities, and technological innovation. Green credit policies encourage heavily polluting companies to invest prudently, assist in decision-making and resource allocation, and promote high-quality development of enterprises.