Environmental pollution liability insurance and commercial credit financing

Environmental risk issues for heavily polluting enterprises are a significant concern for both society and scholars; raising awareness of pollution liability insurance is essential for sustainable development. Within the context of green development, we focus on a unique environmental pollution liability insurance (EPLI) system and examine its relationship with commercial credit. We empirically test this relationship using regression analysis, propensity score matching (PSM), and placebo tests. We find that subscribing to EPLI significantly improves commercial credit financing. This effect is particularly strong in state-owned enterprises, financially developed areas, and regions where governments prioritize environmental issues. Our conclusions remain valid after robustness tests. A mechanism analysis reveals that supplier bargaining power and the value of collateral assets are key mechanisms through which EPLI enhances commercial credit financing.