From voluntary to mandatory implementation: The impact of green credit policy on de-zombification in China

This study investigates the influence of the green credit policy on firm de-zombification in China using the listed firm samples. This paper presents a comparative analysis of the efficacy of two distinct policy implementation methods within the green credit policy framework. The results reveal that the implementation of the Green Credit Guidelines does not yield a statistically significant improvement in the de-zombification of green credit-restricted firms if they are implemented voluntarily. Only by including green credit performance in the assessment of bank officials, the de-zombification of such firms can be markedly promoted. Overall, the green credit policy acts as a catalyst for de-zombification by exerting dual effects: aggravating financial constraints and stimulating green innovation. The positive effect of green credit policy on de-zombification mainly comes from SOEs, firms with weak external supervision and firms located in areas with a lower degree of marketization. The results of the empirical study offer crucial insights for policymaking in China. It is imperative for the Chinese government to continue adhering to and further enhancing the green credit policy, with a particular focus on mandatory measures.