Financing decision of heavy pollution enterprises under green credit policy: Based on the perspective of signal transmission and supply chain transmission

More and more countries have successively promulgated various environmental policies to mitigate climate change and environmental pollution. These policies have become important in promoting low-carbon devel-opment and green transformation through enterprise financing. This study employs a difference-in-difference (DID) model to examine how a green credit policy affects the financing choices of highly polluting businesses using the data of A-share listed corporations from 2009 to 2021. The research finds that: (1) The number of bank loans has significantly decreased for highly polluting companies; a green credit policy will also reduce the scale of any non-bank loans. (2) The extent of equity financing and bond financing of highly polluting firms on the capital market decreased due to market constraints and the function of policy signaling. (3) The impact of a green credit policy will spread to upstream and downstream enterprises through trade credit, thus reducing enterprises' commercial credit scale. (4) The impact of a green credit policy on bank loans is more significant in state-owned enterprises, in regions with a high degree of marketization, and in regions with low intensity environmental regulation. The research results provide targeted policy recommendations for promoting the development of green credit and achieving carbon neutralization.