Research on the Influence of Green Credit Policy on Green Innovation of Heavy Polluting Enterprises

Abstract

This study examines the association between China’s 2012 Green Credit Guidelines and innovation among heavily polluting listed firms. Using panel data for Chinese A-share companies from 2006 to 2024, we compare firms in nine designated heavily polluting industries with other listed firms in a difference-in-differences framework. Green innovation is measured by green patent applications. We also examine patents identified as technologically novel because their four-digit International Patent Classification category had not appeared in the preceding five years. The baseline estimates show a positive association between the Guidelines and both patent measures. Additional analyses suggest that R&D investment may contribute to this relationship, although the evidence for this mechanism is limited. The estimated policy association is stronger among firms with lower operating expense ratios. Subgroup results indicate a larger association with green patent applications among state-owned firms and firms in eastern China, while the estimate for technologically novel patents is larger among non-state-owned firms. These subgroup comparisons should be interpreted cautiously because differences between their coefficients have not been formally tested. The findings offer evidence on how credit policy may shape firms’ innovation decisions, while the causal interpretation depends on the validity of the comparison-group and parallel-trends assumptions.