Does carbon emission trading policy affect bank loans of firms? Evidence from China

ABSTRACT

Using a carbon emission trading pilot policy in China, we construct a DID method to investigate the effect of carbon emission trading on corporate financial behaviour. We find that enterprises in the pilot areas get less bank loans after the ‘pilot policy’, which indicates that carbon emissions trading has a negative impact on debt financing. Additional analysis shows that the negative influence is more significant in state-owned enterprises. Our study provides a more complete picture of the microeconomic impact of carbon emissions trading, and improves our understanding of the role and significance of corporate ‘carbon assets’ in the capital market.

KEYWORDS:

• Carbon emission trading
• bank loans
• state ownership
• carbon assets

JEL CLASSIFICATION:

• G30
• G32
• Q58

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work was supported by the Chongqing Social Science Planning Project ‘Research on environmental protection system innovation and enterprise environmental protection investment decision’ [grant number 2018BS82]; Fundamental Research Funds for the Central University ‘The micro impact and mechanism of public participation in environmental governance on corporate environmental investment decision’ [grant number SWU1809712]