What question did this study set out to answer?

The research aims to examine how different types of local government debt affect corporate green innovation in China.

Local Government Debt and Corporate Green Innovation: Evidence From China

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Investigates government debt effects on green innovation in firms, indicating a need for better fiscal policies.

The research aims to examine how different types of local government debt affect corporate green innovation in China.
Analyzed a comprehensive sample of A-share listed firms in China
Compared the effects of explicit and implicit local government debt on innovation
Conducted mechanism analysis to understand the impacts on credit access and financial stability
Performed heterogeneity tests based on firm size and ownership
Implicit debt suppresses firm-level green innovation while explicit debt promotes it
Implicit debt leads to reduced long-term credit access and higher borrowing costs for firms
The negative effects of implicit debt are stronger in high-pressure regions
Non-SOEs and small firms are most affected by implicit debt, while SOEs and large firms are less impacted

Cheng et al. (2026) studied this question.

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