The Impact of MLF Collateral Expansion Policy on Total Factor Productivity of Polluting Firms

Abstract

Since the reform and opening up, China's economy has developed rapidly and has become a global economic powerhouse. However, for a long time, the economic development model has been rough, resource consumption is high, and growth relies heavily on heavy industry, which is not sustainable.In 2018, China's central bank proposed to incorporate green credit into the qualified collateral framework, an initiative that has the dual function of resource allocation and environmental regulation. Considering that polluting enterprises are more susceptible to this policy, the article chooses polluting enterprises as the research object, quasi-natural experiments based on the MLF collateral expansion policy introduced in June 2018, and adopts a double difference model to analyze whether the new policy can enhance the total factor productivity of enterprises. The results of the study show that the MLF collateral expansion policy can significantly enhance the total factor productivity of heavy pollution enterprises. Finally, based on the obtained results, this paper puts forward targeted recommendations.