The Impact of Green Finance Policy on Corporate R&D Expenses

Abstract

In 2017, the pilot policy of green finance was initially officially implemented to govern the corporate environmental issue. Five provinces with different levels of development were selected to carry out pilot policies of green finance by being provided with credit support and low interest rate. This paper aims to study the effect of the implementation of green finance policies on local R&D. We look the pilot policy of green finance in 2017 as a natural experiment and use the DID method to regress the fixed effects of individuals and years with the R&D spending. We found that green finance policies could ease the constraints brought by the original local economic and political environment to enterprises. Another explanation may be that banks' financial support for enterprises improves the efficiency of R&D, reduces unnecessary R&D waste, and enables enterprises to continue to develop in the period of economic growth with less capital. In order to verify the validity of the model construction, we conducted the Hausman test to verify the validity of selecting the fixed effect, and conducted the parallel trend test to verify the accuracy of our 2017-2019 policy pilot time. Finally, we conducted two robust tests——placebo test to control the time and the PSM-DID. We all obtain the significant experimental results. Then, we puts forward policy suggestions based on the conclusions, which can be used as reference for future research and for the effect of the application of green finance policies in heavily polluting enterprises.