Author(s)

Huang Jiemin ¹, Zhao Yatong ², Peng Ke ²

Affiliation(s)

¹ Shenzhen University of Information Technology, Shenzhen, Guangdong, 518172, China
² Harbin Institute of Technology, Harbin, China

Corresponding Author

Huang Jiemin

ABSTRACT

Taking the enactment of China’s Environmental Protection Tax Lawin 2018 as a policy intervention, this paper investigates the market impacts of environmental regulation from the lens of corporate debt financing costs. Leveraging data on highly polluting enterprises spanning 2009–2021, we construct a difference-in-differences (DID) model to assess the effect of environmental taxation on corporate credit spreads. Findings reveal that the implementation of the environmental tax policy significantly reduced corporate credit spreads, mitigating both default risk and financing costs. These conclusions remain robust following a series of robustness checks. Further heterogeneity analysis uncovers significant disparities in policy effectiveness across enterprises, with more pronounced impacts observed among larger firms and those with stronger credit profiles.

KEYWORDS

Environmental Taxation; Credit Spreads; Difference-in-Differences

CITE THIS PAPER

Huang Jiemin, Zhao Yatong, Peng Ke, Impact of Environmental Protection Tax on the Credit Spreads of High-Pollution Enterprises. Population, Resources & Environmental Economics (2025) Vol. 6: 20-29. DOI: http://dx.doi.org/10.23977/pree.2025.060203.

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