How does China's green credit policy affect the innovation of high-polluting enterprises? From the perspective of innovation quantity and quality

Abstract

Employing the "Green Credit Guidelines"implemented in 2012 as the basis for a quasi-natural experiment, this study applies the method of Difference-in-Differences(DID) to investigate the influence of the Green Credit Policy on both the quantity and quality of enterprise innovation. The outcomes of our analysis reveal that the policy has significantly boosted both the quantity and quality of innovation among enterprises identified as heavy polluters. It is noteworthy that the policy's positive impact on innovation quantity surpasses its positive effect on innovation quality. This substantiates that the Green Credit Policy effectively generates incentivizing outcomes for innovation among the heavy polluters, thereby verifying Porter's hypothesis within the domain of green credit in China. Furthermore, we find that the positive impact is more significant for enterprises with lower innovation capabilities, largescale enterprises, state-owned enterprises, and those situated in both the Eastern and Western regions. Through these findings, this study illuminates a novel perspective on the interplay between the Green Credit Policy and enterprise innovation dynamics in China.