Green credit policy and corporate charitable donations: Evidence from China

Green credit policy (GCP) is a measure the government takes to protect the environment, which will impact firms' behavior. Using a Chinese GCP launched in 2012 as a credit shock and the data of Chinese listed firms from 2007 to 2018, this paper investigates the impact of this credit policy on corporate charitable donations. This paper employs the difference-in-differences method, defining heavy-polluting firms as the treatment group and non-heavy-polluting firms as the control group. Our results show that the GCP significantly improves the charitable donations of heavy-polluting firms. Mechanism analysis indicates that GCP impacts charitable donations through financial constraints and environmental regulatory pressure. Heterogeneity analysis suggests that this effect is stronger for non-state-owned enterprises and firms with weaker external monitoring. Our findings enrich the research on the economic consequences of green credit policy and have practical implications for regulators and policymakers.