Date: Aug.8^th, 2019

Time: 14:00-15:30

Speaker: LIN Chen

Venue: Room 326, School of Economics, Yuquan Campus

[Speaker Intro]

Professor Chen LIN joined The University of Hong Kong (HKU) as Chair of Finance at the Faculty of Business and Economics in 2013. He is Director of Centre for Financial Innovation and Development. He is also a Currency Board Committee member of the Hong Kong Exchange Fund Advisory Committee and an Advisory Council member and a research fellow at HKIMR of Hong Kong Monetary Authority. His research interests include banking and financial institutions, corporate finance, financial contracting, financial regulation, and development economics. Chen’s papers (over 30) have been published in international financial journals such as Journal of Finance, Journal of Financial Economics, Review of Financial Studies, Journal of Financial and Quantitative Analysis, The Accounting Review, Journal of Accounting and Economics, Journal of Accounting Research, Review of Accounting Studies, Management Science, Journal of Law & Economics, Journal of Public Economics.

【Abstract】

We evaluate the impact of credit conditions on firms’ emissions of toxic pollutants. While tightening credit might restrict firm production and reduce toxic emissions (production channel), the abatement channel stresses that tightening credit will induce firms to economize on noncore business functions, such as pollution abatement, increasing toxic emissions. Using four identification strategies, we find evidence that the abatement channel dominates: using three sets of identification strategies. The first strategy exploits shale oil discoveries that generate liquidity windfalls at local bank branches. We measure the degree to which banks in non-shale counties receive liquidity shocks through their branches in shale counties and develop indicators of shocks to firm credit conditions. The second strategy exploits heterogeneity in firm debt maturity and the global financial crisis to identify shocks to firm credit conditions. The third strategy exploits variations in bank holdings of private-label MBS before the crisis. We measure the degree to which banks in a county receive MBS-induced liquidity shocks during the crisis and construct indicators of negative shocks to firm credit conditions. We discover that tightening (loosening) (looser) credit conditions are associated with material increases (reductions) increases (decreases) plants pollution toxic emissions.