Does green credit enhance corporate green total factor productivity?

Green total factor productivity (GTFP) constitutes a fundamental driver for corporate green transitions, closely related to the United Nations sustainable development goals and what China pursues for "new quality productive forces." As a result, it becomes crucial to find out if and how government green credit policies can improve corporate GTFP. To answer these questions, this study uses the Data Envelopment Analysis (DEA) Epsilon-Based Measure (EBM) model and the Malmquist index to create a novel firm-specific GTFP proxy. We find that macro green credit positively and statistically significantly affects corporate GTFP. Further analysis reveals that the concerned effect is functionary through two channels-R&D investment and public supervision. The effect is more prominent for companies in the growth stage, going through a digital transformation, and working in non-polluting or heavily polluting industries. The implications for a sustainable economy are multifaceted from the perspective of policymakers, such as formulating a series of green credit policies on a local level, facilitating environmental information access, and getting every market participant involved and motivated.