Associate Professor Chuanhai Zhang, a researcher of the Base, has published a collaborative paper titled "Fostering firm productivity through green finance: Evidence from a quasi-natural experiment in China" in Economic Modelling

Abstract:

This study investigated how green finance affects the total factor productivity (TFP) of firms in heavily polluting industries. In 2017, the People's Bank of China (PBC) issued a policy of incorporating green finance into its macroprudential assessment system. Applying this event as a quasi-natural experiment to identify causality, we used a difference-in-differences approach to show that the PBC's green finance policy can improve the TFP of firms in heavily polluting industries, thus confirming the Porter hypothesis of environmental regulations. While exploring mechanisms, we showed that the PBC's policy can tighten credit to firms in such industries, forcing them to engage in green innovation and reduce their agency costs, thereby improving their TFP. In addition, the PBC's green finance policy mainly promotes TFP in large-scale and nonzombie firms in heavily polluting industries and in firms in regions with weak bank competition.

Key Words: Green finance,Total factor productivity,Green innovation,Governance efficiency

Link: https://doi.org/10.1016/j.econmod.2022.105979

Teacher Profile

Yanan Wang is an associate professor at the School of Finance, Zhongnan University of Economics and Law. Doctor of Finance, School of Economics, Fudan University, and doctoral student of WHU-Otto Beisheim School of Management in Germany. His research interests include corporate finance, contract theory and behavioral finance. Currently, he has presided over a youth project of the National Natural Science Foundation and participated in many projects of the National Natural Science Foundation and the National Social Science Foundation. The research results have been published in important domestic journals such as Economic Research Journal and Journal of Financial Research. And Journal of Corporate Finance, China Economic Review, Energy Economics, Journal of Business Finance & Accounting, Economic Modelling, Pacific-Basin Finance Journal, Finance Research Letters and other SSCI journals.