Promotion Incentives For Local Top Leaders And The Performance Of Green Credit Policies

Green credit policies are important instruments to achieve energy conservation and emission reduction.If carried out actively and effectively,they can help eliminate outdated production capacity and support environment-friendly companies and projects.Thus,industrial transformation and upgrading will be promoted.In addition to banks and companies,local government officials influence the effects of green credit policies by choosing to push or hinder the executions of them.To understand their behaviors,promotion incentives have to be taken into consideration.To estimate the effects of promotion incentives on the implementation of green credit policies,this paper employs a difference-in-differences approach with the enactment of the Green Credit Guidelines in 2012 as the event and the A-share listed companies in heavy pollution industries and in other industries as treatment group and control group respectively.In the regression model,a new cross-product term is introduced,defined as the product of the promotion incentive variable and the original cross-product term in the DID model.Through the regression analysis on the data from A-share listed companies from 2008 to 2018,it’s showed that for companies in regions with a lower marketization or pollution degree and state-owned companies,the long-term bank loans of companies in heavy pollution industries decrease less when the promotion incentives for the local top leaders are stronger.The regression results indicate that promotion incentives hinder green credit policies from taking effect through local governments’ intervention in financial activities.The behaviors of local government officials are caused by the principal-agent problem between the central and local governments,which can further be explained by the performance appraisal system on local government officials.Therefore,the results of this paper not only have reference value for the development of green finance and the improvement of local environmental governance,but also could help to the refine the performance appraisal system on local government officials,alleviate the principal-agent problem between the central and local governments on environmental governance,and encourage local governments to provide better public services.