Financing preferences and practices for developing sustainable exhibitions in Chinese companies

The paper addresses the urgent need for sustainability in the context of climate change and post-COVID-19 recovery. It highlights the environmental and socio-economic risks from rising temperatures and extreme weather and argues for low-carbon transitions. SMEs, particularly in China—the world’s largest CO2 emitter—face barriers to adopting sustainable practices due to limited green financing access, low green investment, and insufficient sustainability expertise. The study focuses on SMEs in China’s exhibitions industry, a sector with notable environmental impacts, to understand how financing preferences and practices influence sustainable investment. The central research question is whether green financing preferences affect green investment. The introduction outlines the importance of aligning financing with sustainability goals, the potential of green instruments (e.g., green bonds, loans, credit), and the role of responsible financing practices. The paper’s purpose is to examine preferred funding sources and practices and how these shape sustainable exhibitions, providing insights for SMEs, industry stakeholders, and policymakers. The structure includes a literature review, theoretical background, methodology, empirical results, and conclusions with policy recommendations.

The review emphasizes the centrality of financing preferences and practices for SME sustainability. Prior work shows SMEs face financing constraints (Rahaman, 2011) and display heterogeneous financing preferences shaped by managerial perceptions (Baker et al., 2020). Financial literacy and managerial risk perceptions influence financing choices and investment behavior (Yang et al., 2021; Razen et al., 2021; Kling et al., 2022). For green transitions, firms’ preferences must align with sustainability to manage costs and access green finance (Peng & Xiong, 2022). Studies argue firm-level perspectives are critical for understanding green finance uptake (Khan et al., 2022; Sharma et al., 2022). Improving green financing perceptions via green corporate governance and ESG practices enhances access to green credit and investment in greening (Benkhodja et al., 2023; He & Liu, 2023; Gao & Liu, 2023). The review also covers sustainable exhibitions as eco-friendly services aligned with SDGs (Li et al., 2021) and their relevance post-COVID-19, including e-exhibitions’ role in green recovery and culture (Cai et al., 2023; Shang et al., 2023). Overall, the literature identifies financing access, managerial perceptions, literacy, governance, and ESG as key to SMEs’ sustainable investment and underscores exhibitions as a sector for green transformation.

The study analyzes 137 Chinese SMEs in the exhibitions industry over 2015–2021. Firms were identified via ESIEC and CPAS datasets; 137 of 468 companies agreed to interviews and provided financial statements. Variables (log-transformed) include: dependent variable sustainable investment (SUSINV, million CNY; Refinitiv); main independent variable financing green preferences index (FGPI; constructed from green loans, green credit, green bonds, internal equity green financing per Baker et al., 2020 and Chinese green finance tools; sources ESIEC, CPAS); controls: number of employees (NUEM), profit (PRO, million CNY), total revenues (TREV, billion CNY), ICT development (ICT). Panel observations total 959 (7 years x 137 firms). Expected effects: FGPI positive; NUEM ambiguous; PRO positive; TREV ambiguous; ICT positive. Econometric approach: CS-ARDL to account for cross-sectional dependence and heterogeneous dynamics. Preliminary diagnostics: cross-sectional dependence detected (Pesaran CSD test; e.g., SUSINV statistic 55.391, p=0.001; others p<0.001). Panel unit root tests (CADF) indicate non-stationarity in levels and stationarity in first differences for all variables. Panel cointegration confirmed via Westerlund error-correction tests (e.g., Gt robust p=0.031; Ga robust p=0.065; Pt robust p=0.071; Pa robust p=0.044). Main estimation via CS-ARDL provides short- and long-run coefficients and an error-correction term (ECT). Robustness: CUP-FM estimator used to validate long-run coefficients. Additional analysis decomposes FGPI into its components (green loans, green credit, green bonds, internal equity green financing) within the CS-ARDL framework to assess their individual impacts.

- CS-ARDL error-correction: ECM(-1) = -0.668 (p=0.000), indicating convergence to long-run equilibrium. - Short-run effects (Δ): FGPI 0.559 (p=0.021); NUEM 0.034 (p=0.035); PRO 0.074 (p=0.008); TREV 0.003 (p=0.075); ICT 0.435 (p=0.019). Interpreted as approximate elasticities: a 1% rise in FGPI increases sustainable investment by about 0.55% in the short run. - Long-run effects: FGPI 0.635 (p=0.053); NUEM 0.195 (p=0.002); PRO 0.096 (p=0.015); TREV 0.036 (p=0.063); ICT 0.506 (p=0.021). A 1% rise in FGPI increases sustainable investment by about 0.63% in the long run. - ICT development has sizeable positive effects: ~0.43% (short-run) and ~0.50% (long-run) increases in green investment per 1% ICT improvement. - Workforce size (NUEM) and profitability (PRO) significantly and positively affect sustainable investment; total revenues (TREV) show smaller, marginal effects. - Robustness (CUP-FM long-run): FGPI 0.438 (p=0.001); NUEM 0.200 (p=0.053); PRO 0.088 (p=0.020); TREV 0.043 (p=0.077); ICT 0.315 (p=0.013), supporting main results. - Decomposition of FGPI (CS-ARDL): Short-run impacts—green loans 0.135 (p=0.014), green credit 0.003 (p=0.029), green bonds 0.438 (p=0.052), internal equity green financing 0.205 (p=0.015). Long-run impacts—green loans 0.204 (p=0.064), green credit 0.006 (p=0.017), green bonds 0.618 (p=0.004), internal equity green financing 0.264 (p=0.036). Green bonds exert the strongest positive effect on sustainable investment; green credit shows the weakest effect. - Diagnostic results confirm cross-sectional dependence, first-difference stationarity, and panel cointegration among variables.

The findings directly answer the research question by showing that stronger preferences for green financing significantly increase sustainable investment among Chinese exhibition SMEs, with effects larger in the long run than the short run, consistent with gradual capital allocation and adjustment dynamics. The positive roles of ICT development, profitability, and workforce size suggest organizational capacity and digitalization enhance the ability to mobilize and absorb green finance for sustainable projects. Total revenues have smaller and less robust impacts than profitability, implying that margins and internal financial health matter more than scale alone. The FGPI decomposition highlights that green bonds are the most influential financing preference for boosting green investment, likely due to clearer standards, investor demand, and instrument suitability, whereas green credit has the smallest effect, potentially reflecting difficulties in green financial reporting and credit assessment. Overall, aligning financing preferences toward green instruments, especially bonds and internal equity for green purposes, fosters sustainable exhibition investments and supports broader environmental goals.

The study demonstrates that green financing preferences significantly and positively affect sustainable investment in China’s exhibition industry SMEs. Long-run effects exceed short-run effects, indicating persistent benefits as firms adjust. Among financing preferences, green bonds have the largest impact, while green credit has the smallest. Control variables—ICT development, profitability, revenues, and employee count—generally promote sustainable investment. Policy recommendations include: adopting digital technologies (e.g., big data) to navigate green finance markets; standardizing financial and green reporting to ease access to green credit; accelerating digitization of financial and operational activities; expanding green employment to align workforce skills with sustainability; and implementing green fiscal efficiency policies (targeted green taxes/subsidies). Strengthening corporate green management can guide financial and human capital toward sustainability. These measures can facilitate a greener, more resilient exhibition industry and contribute to national sustainability goals.

While explicit limitations are not separately detailed, the authors note avenues for expanding scope: examining impacts of COVID-19 and regional geopolitical tensions on sustainable exhibitions; complementing quantitative analysis with qualitative methods (scenario building, content analysis) since not all facts exist in quantitative data; and conducting province- and city-level studies for more granular policy relevance. The study focuses on 137 Chinese exhibition-industry SMEs over 2015–2021, which may constrain generalizability beyond this sector, geography, and period.