In March 2024, Professor Hu Hongbing, Vice Dean of the School of Finance at Zhongnan University of Economics and Law (corresponding author), along with co-authors Li Weihao (School of Economics and Management, Tsinghua University) and Hong Zekun (Business School, Chinese University of Hong Kong), published a paper titled Green finance policy, ESG rating, and cost of debt: Evidence from China in the internationally renowned journal International Review of Financial Analysis (IRFA).IRFA is a prestigious SSCI journal in the field of international finance, ranked in the first quartile of JCR, with a three-star ABS rating and listed as a TOP journal in the first quartile of economics by the Chinese Academy of Sciences (2023). It has an impact factor (IF) of 8.2 and is ranked 4/111 in the field of business finance journals. The journal aims to publish high-quality theoretical and empirical papers in the field of finance and accounting.

Abstract: Climate change is increasingly bringing greater uncertainty to the economic growth of countries, and carbon emission control has become a global consensus. In the third quarter of 2017, the People's Bank of China introduced a green finance policy (GFP), which incorporated green finance into the macro-prudential assessment (MPA) framework for evaluating commercial banks. Using the difference-in-differences (DID) method and a sample of 2440 Chinese A-share listed companies, this paper finds that after the issuance of this policy, the cost of debt (Cod) for companies with higher ESG ratings significantly decreased. Furthermore, among the specific dimensions of ESG scores, the environmental score has a more significant impact on corporate performance than the social and governance scores. Further analysis also indicates that after the introduction of this GFP, the decrease in the cost of debt is more pronounced for large companies, state-owned enterprises, or companies from non-heavy polluting industries. These findings have guiding significance for the subsequent revision of the GFP and provide insights for the industrial transformation and improvement of the green financial system in China and the world.

The paper link：https://doi.org/10.1016/j.irfa.2023.103051

Author Biographies

Hu Hongbing: Professor, doctoral supervisor, Vice Dean of the School of Finance at Zhongnan University of Economics and Law, and Director of the Risk Management Research Center. He obtained his Ph.D. in Finance from Shanghai University of Finance and Economics, completed postdoctoral research at the Institute of Finance, Chinese Academy of Social Sciences, and was a visiting scholar at California State University, Fullerton, USA. Currently, he serves as a member of the National Committee for Guidance of Graduate Education in Insurance, an expert committee member of the Ministry of Education's Industry-Education Cooperation Talent Cultivation Project, a think tank expert of the China Insurance Association, an external director of Hubei Transportation Investment Group Co., Ltd., and an independent director of TF Securities Co., Ltd. He also holds positions as a specially-appointed review expert for foreign government loans in Hubei Province, Executive Director and think tank expert of the Hubei Insurance Association, and a specially-appointed professor for lectures at China Banking and Insurance News.

He has published dozens of papers in domestic and international core journals such as Financial Research, Educational Research, Economic Dynamics, Insurance Research, Fiscal Research, and International Review of Financial Analysis (IRFA). His research results have been reprinted in Xinhua Digest and Chinese Social Sciences Digest multiple times. He has led two projects funded by the National Social Science Fund, served as the leader of a sub-project of a major project funded by the National Social Science Fund, led a project funded by the Ministry of Education's Humanities and Social Sciences Fund, and participated in over ten projects funded by the National Social Science Fund, including major and key projects, as well as projects funded by the National Natural Science Foundation of China.

Li Weihao: Graduated in 2019 from the School of Finance with a bachelor's degree, Li Weihao was enrolled in the third phase of the Excellent Undergraduate Program in 2021. In 2023, he was recommended for admission to Tsinghua University's School of Economics and Management for a master's degree. Throughout his undergraduate studies, he consistently ranked first in his major for four consecutive years with a weighted average grade. He has been awarded the National Scholarship twice, the First-Class Scholarship once, and the Zhou Jun Scholarship once. Li Weihao has received various honors, including being recognized as an outstanding member of the Communist Youth League at the university level, 2022 Excellence in Youth outstanding learning star, outstanding bachelor's thesis, and outstanding graduate, among others.

He has published two papers in SSCI Q1 journals, International Review of Financial Analysis and Finance Research Letters. His research findings were selected for presentation at the Fourth Camphor Financial Annual Conference, and he won the first prize in the School of Finance's first undergraduate academic forum. Li Weihao has also led outstanding projects in provincial-level undergraduate innovation and entrepreneurship programs, as well as two projects in the university's Bowo Cup project.

Hong Zekun: A graduate of the School of Finance in 2023, Hong Zekun is currently pursuing a Master's degree in Management at the Business School of The Chinese University of Hong Kong. During his time at Zhongnan University of Economics and Law, he served as a member of the Student Union Secretariat in the 2019 cohort and received several university-level scholarships.

He has published one paper in the SSCI Q1 journal International Review of Financial Analysis. His research findings were selected for presentation at the Fourth Camphor Financial Annual Conference.