Does the green credit policy affect the carbon emissions of heavily polluting enterprises?

Green finance is important in carbon reduction, but few studies pay attention to Green Credit Policy (GCP). This study examines the relationship between GCP and CO2 emissions of Chinese heavily polluting enterprises (HPEs). Taking the implementation of Green Credit Guidelines (GCG) as a quasi-natural experiment, we design a Difference-in-Difference (DID) model using panel data. The evidence reveals that GCG can indirectly decrease CO2 emissions by increasing financing costs and improving technical efficiency. Further studies find that companies with non-state background, medium-sized companies and companies in eastern regions are more sensitive to the policy. The paper provides policy implications for building a green financial system and supporting endeavors to achieve carbon peak and carbon neutrality. •GCP could reduce CO2 emissions of Chinese heavily polluting enterprises.•The carbon reduction effect of GCP is increasing year by year.•GCP plays the role by increasing financing cost and improving technical efficiency.•N-SOEs, medium-sized companies and eastern companies are more attentive to GCP.