Can green innovation subsidies reduce the systemic risk of green innovative enterprises? A simulation study

ABSTRACT

Purpose

The study aims to investigate the role of green innovation subsidy policies (GISPs) in reducing the systemic risk (SR) of green innovative enterprises (GIEs).

Methodology

This paper studies the subject behaviours and system evolution rules to construct the artificial GIEs system, and investigates the effects of the GISP intervention and the intention for green R&D on the SR.

Findings

Firstly, the internal and external factors of the constructed model can significantly reduce the number of bankruptcies and the SR of GIEs. In addition, the joint effect is better than a single one and has an obvious ‘synergy effect’.

Originality

This study has practical implications for GIEs, banks, and governments. First, we find the SR of the GIEs. In addition, we adopt bankruptcies to measure SR and consider the liquidity early warning mechanism. Moreover, we focus on the effects of GISP on their SR and emphasize the function of the ‘implicit guarantee mechanism’. More importantly, we compare the forms of GISPs and analyze their possible internal and external mechanisms to reduce SR.

KEYWORDS:

• GIEs
• banks
• GISP
• SR

Disclosure statement

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

Notes

1 Note that the intention for green R&D is highly related to green R&D investment. The enterprises need to make a decision whether to make the R&D (Shi and Shen 2019).

2 Note that we assume that the intention for green R&D and the government subsidy policies are strictly exogenous, which makes it possible to study their joint effects on systemic risk.

3 Note that liquidity assets include fixed assets that can be turned into cash in the short term.

Additional information

Funding

This work was supported by the Humanities and Social Sciences Fund Project for Basic Scientific Research Business Expenses of Central Universities (SKYC2021021), the General Research Project of Philosophy and Social Sciences in Colleges and Universities of Jiangsu Provincial Department of Education (2021SJA0059), National Natural Science Foundation of China (71971055, 72173018), Fundamental Research Funds for the Central Universities (3214002104D) and Postgraduate Research & Practice Innovation Program of Jiangsu Province (KYCX20_0165).

Notes on contributors

Wenke Yang

Wenke Yang and Shuai Lu contributed equally to this work. They are co-first authors.