Value of dual-credit policy: Evidence from green technology innovation efficiency

The dual-credit policy (DCP), introduced by the Chinese government in 2017, aims to establish a market based mechanism for fostering the coordinated development of energy-efficient and new energy vehicles in the automobile industry through a credit trading system. This policy plays a significant role in promoting green technology innovation, thereby contributing to the low-carbon transformation of the transportation sector in line with the dual-carbon target. However, challenges related to policy design and substantial variations among automakers during the implementation process have cast uncertainty on the effectiveness of the DCP. To address this issue, this study examines the impact and mechanisms of the DCP on the green technology innovation efficiency (GTIE) of automakers by utilizing a sample of 18 Chinese A-share listed automakers from 2012 to 2020. The analysis employs a combination of the propensity score matching (PSM) and difference in-differences (DID) approaches. The empirical findings indicate that the introduction of the DCP significantly improves the GTIE of automakers. However, the intensity of this effect diminishes over time. The promotion of GTIE is primarily achieved by alleviating automakers' financial constraints and increasing their management fund inputs. Furthermore, this effect is strengthened by customer concentration and supply chain concentration. Additionally, the study identifies certain enterprise characteristics that generate heterogeneity in the effects of the DCP, including enterprise ownership, region, and executive education background. The results reveal that the DCP has a more pronounced impact on private automakers, those located in eastern regions, and those with lower levels of executive education.