Carbon Market and corporate financing behavior-From the perspective of constraints and demand

In the context of the development of the Low-Carbon Economy, the Carbon Market is an important way to guide enterprises to actively participate in environmental governance and promote enterprises to achieve green transformation. In this study, the first group of electric power industry companies participating in the carbon market on July 16, 2021, was selected as the treatment group. And the difference-in-differences (DID) model was used to investigate the influence of the Carbon Market on corporate financing behavior. This study finds that Carbon Market can significantly promote the level of corporate financing. This is achieved through enhancing credit financing and long-term financing. The heterogeneity analysis shows that the promotion impact is more obvious in state-owned enterprises, start-ups, and smaller enterprises. Additionally, we discuss the above impacts in terms of constraints and demands. In terms of constraints, the increase of external financing difficulty and the squeeze of own financing space will inhibit the promotion of the Carbon Market on the financing level. In terms of demand, corporate investment demand and investors' attention will enhance the positive impact of the Carbon Market on the financing level. This paper expands the relevant research on the Carbon Market. It reveals the mechanism and effective path of corporate financing behavior in the Low-Carbon Economy. In addition, the paper provides new evidence for the improvement and development of the Carbon Market policies.