Banking Competition and the Effectiveness of Environmental Regulation: Evidence from China
Title：Banking Competition and the Effectiveness of Environmental Regulation: Evidence from China
Speaker：Mohan Zhou （researcher at the School of Economics, Zhejiang University）
Host：Jing Hang（Assistant Professor , Lingnan College, Sun Yat-sen University）
Date and Time：October 23rd, 2020 (14:30-16:00)
Location：Room 402, MBA building
Language：English+Chinese
Abstract:
Poor development in financial markets may hinder firms from achieving environmental regulation goals set by governments. By using a policy change of environmental regulation in China and exploiting cross-city variation in banking concentration, we study how competition in local banking market affects the effectiveness of environmental regulation. Results indicate that banking industry competition played a positive role in assisting firms' reduction in SO2 emission to meet environmental regulation targets. Firms located in cities where banking competition is fierce tend to invest more in desulphurizing capacities when faced with a tightening of regulation. Both long-term debt and current liability increased for firms in cities with tougher banking competition, suggesting these processes may be facilitated by bank financing. These results are indicative that a well-functioning banking sector plays a critical role for environmental regulation to be effective.
Introduction of the Speaker:
Mohan Zhou is currently a researcher at the School of Economics, Zhejiang University (ZJU). Before joining ZJU, he was an associate professor at the Central University of Finance and Economics (Beijing). Mohan obtained his PhD from the University of Hong Kong in 2013. His research focused on heterogeneous firm models and their application in both international trade and environmental economics. His research papers appear in academic journals such as Journal of Environmental Economics and Manangement and Canadian Journal of Economics.
