The Economic Impact of Green Credit: From the Perspective of Industrial Structure and Green Total Factor Productivity

Promoting economic growth while achieving sustainable development is the original purpose of green credit. Based on panel data of 30 Chinese provinces from 2008 to 2020, we systematically evaluate the economic impact of green credit by exploring the influencing factors, regional differences, and underlying mechanisms. The results show that: (1) Green credit is more prevalent in provinces with higher foreign direct investment (FDI), research and development expenditures (R&D), financial development, urbanization rates, and lower government fiscal spending. At the regional level, green credit issuance gradually decreases as the region moves towards the west. (2) From a national perspective, green credit issuance has a significant impact on local economies. Local GDP increases by 0.482% for every 1% increase in green credit. (3) The underlying mechanisms are the rationalization of intra-industry structure and the improvement of green total factor productivity. These findings are robust against alternative measures of economic growth, quantile regression estimation, and the construction of instrumental variables. Finally, we propose policy recommendations for China's continued implementation of green credit policies.