Impact of Green Credit Policy on the sustainable growth of pollution-intensive industries: Evidence from China

Based on the dataset of Chinese A-share market firms between 2004 and 2019 and the implementation of the Green Credit Guidelines, this study explores the impact of green credit policy (GCP) on the sustainable development of pollution-intensive enterprises (PIEs) in terms of their financing, growth, green technology progress, and environment protection. Using a Difference-in-Difference model, the empirical analysis reveals that GCP inhibits PIEs' financing and investment, and reduces employment opportunities. It hinders PIEs' green innovation, but does not reduce their investment in green technology projects. Though it does not encourage investment in environment protection, it drives PIEs to discharge fewer types of pollutants. The effect of GCP on PIEs' growth and green technology progress is similar across various enterprises. However, state-owned enterprises, large firms and those located in the eastern region are more likely to discharge fewer types of pollutants with the implementation of GCP. This study suggests that green finance has some limitations when promoting the sustainable development of pollution intensive industries. It is necessary to accelerate the development of transition finance to support the green transformation of PIEs, and prevent potential economic and social risks such as job losses due to the shrinkage of PIEs.