Green credit regulation, induced R&D and green productivity: Revisiting the Porter Hypothesis

By Dongyang Zhang. 2021

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Abstract This paper investigates the causal effect of green credit regulation policy on green productivity and revisits the Porter hypothesis. By separating R&D into environmentally induced R&D and production R&D, we find that green credit regulation policy significantly improves green total factor productivity (GTFP) growth rather than input-output TFP. We further show that environmentally induced R&D is the driver of GTFP, while production R&D significantly improves the input-output TFP. Finally, our estimations indicate that internal financing intermediation is used to finance environmental R&D projects due to the high cost of environmental innovation.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/51509f62637985bf0892ecf341d9f439f261a9bd