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Autre publication scientifique Documents de travail du Centre d'Économie de la Sorbonne Année : 2023

Internal finance, financial constraint and pollution emissions: evidence from China

Résumé

This study explores the role of internal finance on firms' environmental behavior, focusing specifically on sulfur dioxide (SO2) emissions in China's rapidly growing industrial sector. Using a rich and unique dataset provided by the Ministry of Environmental Protection (MEP), our baseline results find a statistically significant positive relationship between asset tangibility and SO2 emissions intensity, revealing that credit-constrained firms with higher tangible assets contribute to elevated pollution levels. Additionally, we observe that firms with stronger internal finances experience a significant reduction in SO2 emissions. Our empirical analysis uncovers two key mechanisms through which internal finance influences firm behavior. First, firms with stronger internal financial health, as measured by metrics like cash flow, current ratio, and coverage ratio, are more inclined to invest in Research & Development and Total Factor Productivity, especially in credit-constrained sectors. Second, these financially robust firms are more proactive in adopting SO2 abatement technologies, an effect that becomes more pronounced in the context of credit-constrained firms. Our findings offer a nuanced understanding of how internal financial resources can serve as a dual lever for both innovation and sustainability, particularly in settings where external financing is limited.
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Dates et versions

halshs-04318505, version 1 (08-12-2023)

Licence

Paternité - CC BY 4.0

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  • HAL Id : halshs-04318505 , version 1

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Thomas Pernet, Mathilde Maurel, Zhao Ruili. Internal finance, financial constraint and pollution emissions: evidence from China. 2023. ⟨halshs-04318505⟩
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Dernière date de mise à jour le 07/04/2024
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