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Low-Carbon Governmental Policies and Cost of Debt: Evidence from China

Gang Zhao, Jianhao Zhang, Justin Jin, Khalid Nainar

Economics of Energy & Environmental Policy2026https://doi.org/10.5547/2160-5890.15.1gzhaarticle
AJG 1ABDC B
Weight
0.50

Abstract

This paper uses the staggered difference-in-differences design to investigate the effects of the low-carbon city pilot (LCCP) policy on the cost and underlying mechanisms of debt financing for enterprises. Our findings show that the LCCP significantly decreases the debt cost of enterprises through enhancements in Environmental, Social, and Governance (ESG) performance and the reduction of information asymmetry. Additional analysis indicates that the LCCP’s ability to reduce the cost of debt is particularly pronounced for firms with higher agency costs and those located in China’s eastern regions. This study offers evidence for assessing the effectiveness of low-carbon policies and suggests recommendations to policymakers seeking to enhance the design and implementation of LCCP, thereby contributing to the green development of enterprises and regions.

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https://doi.org/https://doi.org/10.5547/2160-5890.15.1gzha

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@article{gang2026,
  title        = {{Low-Carbon Governmental Policies and Cost of Debt: Evidence from China}},
  author       = {Gang Zhao, Jianhao Zhang, Justin Jin, Khalid Nainar},
  journal      = {Economics of Energy & Environmental Policy},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.5547/2160-5890.15.1gzha},
}

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.