Bank Deregulation and Corporate Environmental Performance

51 Pages Posted: 16 Jul 2020 Last revised: 7 Oct 2021

See all articles by Shiyi Chen

Shiyi Chen

Fudan University - School of Economics

Tao Chen

Nanyang Business School, Nanyang Technological University; affiliation not provided to SSRN

Pingyi Lou

Fudan University

Hong Song

Fudan University

Chenyu Wu

Fudan University - School of Economics

Date Written: June 24, 2020

Abstract

In this study, we provide one of the first evidence on the effects of bank deregulation on corporate environmental performance. We use a unique dataset that contains rich information on firms’ toxic emissions and exploit bank branching deregulation in China. We find that compared with firms with lower exposure, firms more exposed to this deregulation improve their environmental performance, as measured by lower chemical oxygen demand (COD) emission intensity after deregulation. We further demonstrate that these firms’ production efficiency increases and the ratio of tangible assets to total assets decreases, which suggests that upgrading technology and asset mix are the main channels. To improve the efficiency of the banking system, many developing countries are undergoing or moving toward liberalizing it. By focusing on firm environmental performance, we document an important but unanticipated consequence of bank deregulation, and the result also provide policy implications for the burgeoning reform in green finance.

Keywords: Bank deregulation, Credit conditions, Green finance, Corporate social responsibilities

JEL Classification: G21, Q53, Q55

Suggested Citation

Chen, Shiyi and Chen, Tao and Lou, Pingyi and Song, Hong and Wu, Chenyu, Bank Deregulation and Corporate Environmental Performance (June 24, 2020). Nanyang Business School Research Paper No. 20-15, Available at SSRN: https://ssrn.com/abstract=3633696 or http://dx.doi.org/10.2139/ssrn.3633696

Shiyi Chen

Fudan University - School of Economics ( email )

600 GuoQuan Road
Shanghai, 200433
China

Tao Chen

Nanyang Business School, Nanyang Technological University ( email )

Singapore, 639798
Singapore

affiliation not provided to SSRN

Pingyi Lou

Fudan University ( email )

600 Guoquan Rd
Shanghai, 200433
China

Hong Song

Fudan University ( email )

600 Guoquan Road
Shanghai, 100045
China

Chenyu Wu (Contact Author)

Fudan University - School of Economics ( email )

600 GuoQuan Road
Shanghai, 200433
China

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