Does the ”Belt and Road” initiative impact a firm’s green investments?

ABSTRACT

Based on the quasi-natural experiment of the ‘Belt and Road’ initiative by the State Council in March 2015 in China, we use a difference-in-differences (DID) research design to examine the impact of the ‘Belt and Road’ initiative on firms’ green investments. Our DID results show that compared with firms in the control group, supported-firms significantly decreased their green investments after the ‘Belt and Road’ initiative. Specifically, firm-level green investments of supported-firms decreased by approximately 44% after the ‘Belt and Road’ initiative than before the ‘Belt and Road’ initiative relative to an average firm. After the use of placebo test, PSM test, and replacement of variables and samples test, the basic conclusion remains unchanged. Further analysis shows that the negative effect of the ‘Belt and Road’ initiative on green investments is more salient for key provinces, heavily polluting industries, weak industry competition, low management power, high media attention, and high analyst attention. Collectively, our findings systematically identify and examine the influence of the ‘Belt and Road’ initiative on green investments.

KEYWORDS:

• The Belt and Road initiative
• green investment
• quasi-Natural experiment
• heavily polluting industries
• industry competition

JEL CLASSIFICATION:

• D25
• G18
• H75
• R11

Disclosure statement

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

Additional information

Funding

The work was supported by the National Social Science Foundation [21BGL008]; A Project Funded by the Priority Academic Program Development of Jiangsu Higher Education Institutions [PAPD].