Can green credit increase firm value? Evidence from Chinese listed new energy companies.

Green credit plays a crucial role in reducing energy consumption and environmental degradation in China. Using data on China's new energy listed companies from 2007 to 2018, this study explores the impact of green credit on new energy firms' value, as well as the mediating effects of financing constraints and external supervision on the relationship between green credit and new energy companies' economic benefits. Our results suggest that green credit significantly improved new energy firms' value, and this positive impact can last over the long term. The above result is robust to using alternative measures, replacement of fixed effects, exclusion of abnormal samples, and placebo test. Additional tests reveal that green credit improves new energy companies' value by alleviating financing constraints and strengthening external supervision. Finally, green credit's value-enhancement effect is heterogeneous, depending on corporate property rights, business life cycle, implementation of Green Credit Guideline policy, and the firms' geographical location. Our conclusions suggest that government should not only pay attention to the continuity of green credit commitment but also the mitigation of financing constraints and improvement of external supervision for new energy companies. Moreover, heterogeneous factors should be considered to formulate and calibrate related policy rather than a one-size-fits-all policy.