Monetary policy uncertainty and green investment decisions: A cross-national spillover perspective

This study utilizes panel data of Chinese A-share listed companies from 2008 to 2020 to explore whether and how the United States' (US) monetary policy uncertainty (MPU) affects the green investors' entry (GIE) into a firm in China. The results indicate that US MPU has a significant negative impact on the GIE in China. This finding holds true even after a series of tests for endogeneity and analyses to confirm its robustness. Mechanism analysis reveals that US MPU primarily reduces the ability of Chinese companies to attract green investors by increasing the corporate default risk and financing constraints, as well as diminishing corporate competitiveness. Further heterogeneity analysis shows that US MPU has a more significant negative impact on GIE for enterprises in the declining phase, for non-state-owned firms, and for non-heavy pollution industry firms. The conclusion of this study suggests that governments and companies should consider and value the role of the US MPU when attracting green investors.