How Environmental Regulation Imperatives Introduce Innovation in Firm Financing Choice among selected Asian Economies

Bilal Haider Subhani, Wei Wei, Naheed Roni, Umar Farooq

Research output: Contribution to journalArticlepeer-review


Green resources have gained substantial scholarly, and policy attention over the last few decades, and are considered as an effective phenomenon to resolve rising pollution and energy crises in under-analyzed economies. Therefore, it is crucial to explore the impact of environmental regulation imperatives (carbon tax rate, green energy intensity, and green productivity) on financing priorities (debt financing and equity financing). For this purpose, we use 10 years of data from the non-financial sector of 6 Asian Economies (China, India, Japan, Pakistan, Singapore, and South Korea), by employing a two-step system Generalized Method of Moments (GMM) for analysis purposes. The findings postulate that carbon tax is inversely and significantly associated with equity and debt financing due to over coating of cost. However, green energy intensity has a direct and significant connection with debt and equity financing. It means an increment in green energy sources leads to boost and strengthen the confidence of the stakeholders in investment and lending decisions. Similarly, green productivity directly and significantly affects debt and equity financing. It further means that firms achieving their goals while mitigating environmental impact leads to an improved resource efficiency, cleaning waste and pollution, and apt sustainable operations. In addition, it attracts stakeholder's intentions optimistically while making investing and lending decisions. Moreover, the analysis outputs reveal that this study brings innovation in the firm financing choice while considering environmental impact. This arrangement of variables has never been discussed before in the literature of financial economics and environmental economics.
Original languageEnglish
Article number139194
JournalJournal of Cleaner Production
Publication statusPublished - 16 Oct 2023


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