Can the Superposition of Green Policies Improve the Investment Efficiency of High-Polluting Firms Even More?

We explore the effect of overlapping green policies on investment efficiency of listed firms in China, by regarding the dual policies of green credit and low-carbon city pilot in 2012 as a quasi-natural experiment. The results show that the superposition of green policies can more significantly improve investment efficiency of high-polluting firms than the green policy alone. In addition to limiting credit availability and increasing financial constraints, green policies also influence firms' ESG ratings, encourage green upgrading and transformation, and increase green investment to promote firm investment efficiency. Further research finds that green policies significantly contribute to investment efficiency improvements for state-owned firms, large-scale firms, firms with higher long-term debt, and capital-intensive firms. Therefore, coordinated green policies provide an opportunity to achieve a win-win situation of "pollution control" and "efficiency improvement".