The impact and mechanism of carbon emission trading on corporate default risk
In recent years,with the increase of various uncertainties at home and abroad,cor-porate debt problems occur frequently and the risk of default cannot be ignored.Under the background of low-carbon and green development,the carbon emission trading(CET)system is an important environmental regulation set up in China for realizing carbon peaking and car-bon neutrality goals.While encouraging corporates to reduce carbon emissions,does it affect their default risk?Based on a quasi-natural experiment of China's CET system,using the data of listed companies in the pilot area from 2010 to 2020,this paper studies the impact of CET on corporate default risk through the difference-in-differences model(DID)and difference-in-difference-in-differences model(DDD).This research finds that CET significantly reduces the default risk of the pilot corporates,especially high-polluting corporates.After a series of ro-bustness tests,the conclusion is still valid.Mechanism research shows that CET reduces the default risk by increasing green innovation,strengthening environmental information disclosure and easing financing constraints.Heterogeneity analysis shows that pilot policies have a more sig-nificant mitigation effect on enterprise default risk in areas where local environmental governance is stronger and public environmental concern is higher.This paper broadens the research on the relationship between environmental risk and default risk,enriches the empirical evidence on the effect of the carbon finance market at the micro level,and also provides beneficial enlightenment for the prevention and control of financial risks in the green transformation of enterprises.
carbon emission tradingdefault riskgreen innovationenvironmental information disclosurefinancing constraints
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