The Impact of Climate Change On Financing Cost of Heavy-Pollution Firms in China
Abstract We examines the effects of climate change on the financing cost of heavy-pollution firms using firm-level panel data analysis. The empirical results demonstrate that the annual temperature and precipitation changes can significantly promote the financing costs of heavy-pollution firms, the positive impacts of annual temperature and precipitation changes on the financing costs of large, medium and small heavy-pollution firms has shown a gradual weakening trend with an increase of firm size, and the positive effects of annual temperature and precipitation changes on the financing costs of younger and older heavy-pollution firms has shown a decline trend with an increase of firm age. The evidences confirms that the impact of climate change on the financing costs of heavy-pollution firms exhibit a significant firm size and age discrimination of financing behaviors. Government decision-makers have to identify and optimize the transmission effect of climate change response on financing behavior decisions of heavy-pollution industries, financial institutions alleviate financial conflicts and credit discrimination behaviors and optimize the efficiency of financial resource allocation. Firms’ executives correct climate change strategy, optimize the climate- relevant operation, investment and financing activities, and alleviate unfavorable influences of climate changes for heavy-pollution firms.