The Dual Impacts of Green Credit on Economy and Environment: Evidence from China

Abstract

Green credit is regarded as an important means to promote sustainable growth. Based on the provincial panel dataset of China from 2007 to 2017, this paper investigates the dual impacts of green credit on the economy and environment, and it establishes mediating effect models to analyze the Porter hypothesis. The results show that the green credit policy significantly improves economic performance and reduces pollutant emissions. The above results are robust to employing methods with alternative variables and instrumental variables. Second, the green credit policy contributes to innovation; that is, the green credit increases the innovation scale and improves innovation efficiency. The results of mediating effect models suggest that the Porter effect of green credit can be achieved by improving innovation efficiency. The findings of the current study indicate that the green credit policy helps achieve the win–win situation for economic goals and environmental targets.