Green Credit and Company R&D Level: Empirical Research Based on Threshold Effects

Abstract

Commercial banks follow sustainable development strategies to provide green credit for companies. As the main target for banks to issue green credit, environmental protection companies carry out research and development (R&D) activities for the purposes of protecting the environment and sustainable development. Therefore, the R&D level of environmental protection companies is a measure of whether the green credit policy meets its purpose. Therefore, it is particularly important to study green credit from a company perspective. This paper used panel data from 24 environmental protection companies listed on the Shanghai and Shenzhen Stock Exchange from 2012 to 2017 and adopted a threshold model to examine the relationship between green credit and company R&D level. The results indicate that there is a positive but nonlinear relationship between green credit and company R&D levels. The empirical analysis through the threshold model shows that a threshold effect remains on the relationship and this threshold effect is caused by the levels of firm size, bank lending, and government subsidies.