Environmental Regulation,Short-term Failure Tolerance and Firm Green Innovation:Evidence from the Practice of Green Credit Policy
Promoting green technological innovation is a critical junction and focal point for China's implementation of the innovation-driven development strategy and the green transformation of development patterns.The effective utiliza-tion of green finance to facilitate enterprise green technological innovation constitutes an urgent issue in need of research attention.The green credit policy,which has been comprehensively implemented since 2007,stands as the most significant policy practice in China's green finance.This article,based on China's green credit policy,takes a novel perspective of short-term failure tolerance.Employing data from listed manufacturing companies in the Chinese A-share market and em-ploying difference-in-differences and difference-in-differences-in-differences estimation methods,this article conducts an in-depth empirical investigation into the aforementioned issues.In this article,tolerance of environmental regulations to-wards short-term innovation failures by enterprises refers to the elasticity of the impact of foreseeable penalties imposed by environmental regulations on the primary production and operational activities of enterprises when they face the risk of failure in green innovation in the short term(referred to as short-term failure tolerance).The empirical findings of this article show that the green credit policy significantly inhibits green innovation of heav-ily polluting enterprises.Due to the lack of short-term failure tolerance,the inhibitory effect on green innovation is more pronounced among enterprises with low environmental capital.The lower the policy's short-term failure tolerance,the stronger the inhibitory effect on green innovation of heavily polluting enterprises.Further mechanism tests show that the short-term failure tolerance of environmental regulation has a significant impact on firms'environmental behavior choices.Due to the lack of short-term failure tolerance,the green credit policy promotes non-innovative environmental in-vestments by polluting enterprises and crowds out their green innovation inputs.Additionally,the credit financing con-straints induced by the policy also restrict firms'green innovation investments.Ultimately,the green credit policy exerts a negative impact on green innovation of heavily polluting enterprises through the"crowding out"effect and resource constraint effect.The research results indicate that firm tolerance for short-term innovation failures is a crucial condition for environmental regulations to promote firm green innovation.Compared with existing literature,this article makes the following innovations and contributions.Firstly,it innova-tively examines the impact of environmental regulations on enterprise green innovation from the perspective of short-term failure tolerance,highlighting the adverse effects on green innovation when environmental regulations lack short-term failure tolerance.The research findings hold significant practical and policy implications.Secondly,focusing on the green credit policy,this paper,for the first time,explores the issue of firms'environmental investment behavior choices from the perspective of short-term failure tolerance,further refining the mechanism analysis of how the green credit policy affects enterprise green innovation.Based on the characteristics of different types of environmental investments,this paper proposes that the short-term failure tolerance of environmental regulations exerts a significant impact on firms'environmental behavioral choices,ultimately influencing the policy's innovation effects.Finally,existing literature(Hu et al.,2021;Wang and Wang,2021a;Ding et al.,2022;Zhang et al.,2022;Chen et al.,2022)commonly uses the publica-tion date of the 2012 Green Credit Guidelines as the research timeframe for studying the green credit policy,overlooking the impact of the policy from 2007 to 2011.This article takes the comprehensive implementation of the green credit policy in 2007 as the research timeframe,comprehensively revealing the effects of green credit policy during different pe-riods.It also highlights the potential impacts of neglecting the policy effects during 2007-2011 in related studies,provid-ing references for research on the green credit policy.
Green InnovationGreen Credit PolicyShort-term Failure ToleranceEnvironmental Investment
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