Environmental behaviour under credit constraints - Evidence from panel of Indian manufacturing firms

Firms play a major role in facilitating green growth in developing nations by promoting environmental pro-tection investment to control pollution caused during the manufacturing process. The paper explores whether the financial vulnerability of firms curbs their investment towards environmental practices that eliminate the cre-ation of wastes or pollutants and hence acts as a deterrent towards green economy. Using firm-level data for manufacturing firms from 2010 to 2019, it is confirmed that financial barrier is an encumbrance for eco-investment by firms. We also focus on the environmental behavior of firms classified according to their ownership structure observing that government-owned firms (GOFs) tend to rely less on their internal and debt capital to finance their environmental investment, whereas private-owned firms (POFs) rely mainly on their internal capital. However, internal financing methods have generally no significant impact on the eco-investment decision of foreign-owned firms (FOFs).