Financing preferences and practices for developing sustainable exhibitions in Chinese companies

Climate change, driven by human activities, poses significant threats to ecosystems and human well-being. The COVID-19 pandemic highlighted the vulnerability of existing systems and underscored the need for resilient, sustainable solutions. A green economic recovery, involving investments in renewable energy and sustainable infrastructure, is crucial. However, small and medium-sized enterprises (SMEs) often face challenges in adopting sustainable practices due to limited access to green financing, low investment in green initiatives, and lack of expertise. This research investigates the financing preferences and practices of Chinese SMEs in the exhibition industry to understand how they approach financing decisions for sustainability. China's role as a major carbon emitter and its commitment to sustainability make this study particularly relevant. The research explores funding sources, financing practices, and strategies for promoting sustainable development in this sector, offering insights for SMEs, stakeholders, and policymakers.

Existing research highlights the challenges SMEs face in accessing green financing and the importance of sustainable financing practices for their growth and resilience. Studies emphasize the role of managerial perception, financial literacy, and risk perception in shaping investment preferences. The literature also acknowledges the complexities of green financing and the need for alignment between owners' perceptions and sustainability goals. Previous work has focused on the sustainable exhibition industry as an eco-friendly alternative to traditional exhibitions, highlighting its role in green tourism and green recovery. This study builds upon this existing literature by focusing specifically on Chinese SMEs in the exhibition industry and their financing preferences for sustainable practices.

This study utilizes panel data analysis, gathering information on 137 Chinese SMEs in the exhibition industry from the Enterprise Survey for Innovation and Entrepreneurship in China (ESIEC), A survey of Chinese SMEs on plans, experiences, and perceptions of global e-business, and Information Disclosure and Corporate Governance in China (CPAS). The data covers the period from 2015 to 2021 (959 observations). A financing green preferences index is constructed based on green loans, green credit, green bonds, and internal equity green financing. The dependent variable is sustainable investment (SUSINV), collected from the Refinitiv database. Control variables include the number of employees, profit, total revenues, and ICT development. The Cross-sectionally Augmented Autoregressive Distributed Lag (CS-ARDL) method is employed to analyze the data, with robustness checks using the CUP-FM technique. The financing green preferences index is further decomposed to analyze the individual effects of different financing sources.

The CS-ARDL analysis reveals a positive relationship between the green financing preference index and green investments. A 1% increase in the index leads to a 0.55% short-term and 0.63% long-term increase in green investments. The number of employees, profitability, and total revenues also positively influence green investments. Information and communication technology (ICT) development also has a significant positive impact. The robustness test using the CUP-FM method confirms the findings. Decomposition of the green financing preference index shows that green bonds have the most significant effect on green investments, followed by internal equity green financing, green loans, and green credit. The limited impact of green credit is attributed to the lack of standardized green financial reporting in China, hindering creditworthiness assessment.

The findings address the research question by demonstrating the significant impact of green financing preferences on green investments within the Chinese exhibition industry. The positive influence of profitability and ICT development highlights the importance of financial strength and technological advancements for sustainability initiatives. The greater impact of green bonds compared to other financing options suggests the potential of this instrument for driving green investments. The relatively weak influence of green credit points to the need for improved financial reporting standards to facilitate access to this financing source. These results contribute to the broader understanding of sustainable financing in emerging economies and its impact on specific sectors.

This study demonstrates that green financing preferences, particularly the preference for green bonds, significantly influence green investment in the Chinese exhibition industry. Profitability, workforce size, total revenues, and ICT development also play crucial roles. The findings highlight the importance of promoting green financial reporting standards, fostering the use of green bonds, and encouraging investments in ICT for sustainable development in this sector. Future research could explore the impact of factors like COVID-19 and geopolitical tensions on sustainable exhibition development, employing both qualitative and quantitative methods, and focusing on regional variations within China.

The study is limited to 137 Chinese SMEs in the exhibition industry, potentially limiting the generalizability of the findings to other sectors or regions. The reliance on self-reported data for the green financing preference index may introduce potential biases. Future research should consider a larger and more diverse sample, incorporating both qualitative and quantitative data for a more comprehensive understanding of the factors influencing green investment decisions.