Bank Competition and Corporate Environmental Performance

43 Pages Posted: 16 Jul 2020 Last revised: 8 Apr 2021

See all articles by Shiyi Chen

Shiyi Chen

Fudan University - School of Economics

Tao Chen

Nanyang Business School, Nanyang Technological University

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 use a unique dataset that contains rich information about firms’ water pollutant emissions and exploit bank branching deregulation in China as an exogenous positive shock on bank competition to study the causal effects of bank competition on corporate environmental performance. We find that firms more exposed to the bank deregulation improve their environmental performance, measured by lower chemical oxygen demand (COD) emissions, after the shock compared with firms with lower exposure. We further demonstrate that treated firms’ production efficiency increases and the ratio of tangible assets to total assets decreases, which suggests that upgrading technology and collateral are the main channels by which bank competition reduce firms’ toxic emissions after the deregulation.

Keywords: Bank competition, Credit conditions, Environmental performance, 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 Competition 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

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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