Environmental Courts and Supply Chain Financing in China

The institutionalization of environmental courts enhances regional environmental enforcement efficacy, which in turn exerts intensified regulatory pressure on local pollution intensive enterprises. Empirical evidence confirms that such judicial mechanisms significantly improve the supply chain financing capacity of regulated firms through a green governance channel. This causal pathway operates via three interrelated mechanisms: increased environmental disclosure transparency, strategic recruitment of executives with environmental expertise, and systematic ESG performance upgrades. Collectively these adaptations enable polluting enterprises to achieve better supply chain financing conditions. Subgroup analysis identifies three dimensions of heterogeneous treatment effects. First, the financing enhancement effect is more pronounced among larger enterprises due to their greater resource allocation flexibility. Second, firms with gender-diverse leadership, particularly those employing female executives, demonstrate stronger responsiveness to environmental regulations. Third, enterprises operating in less technology intensive sectors benefit more substantially from compliance driven financing improvements, as their operational structures are more amenable to rapid environmental governance adjustments.