Accelerating enterprises’ green transition is not only a necessary action to align with China’s “dual-carbon” goals and fulfill social responsibilities, but also a critical strategy for enterprises to enhance competitiveness and achieve sustainable development. From a fiscal and financial perspective, this study empirically examines the impact of local green credit policies on corporate green transition using these policies as a quasi-natural experiment, with a focus on enterprises’ production and emission dynamics. The findings reveal that local green credit policies significantly promote enterprises’ green transition by simultaneously driving green transition in both production processes and emission management. Mechanism analysis demonstrates that these policies effectively facilitate green transition through four channels: improving corporate financing accessibility, incentivizing green mergers and acquisitions, expanding green credit scale, and reducing corporate greenwashing behaviors. These findings remain robust after a series of rigorous tests. Further analysis indicates that the policies exhibit stronger effects on enterprises with low tax contribution levels, high-quality internal controls, and geographical advantages in financial resource allocation. Notably, state-owned ownership and political connections hinder the effective implementation of the policies, while executives’ financial backgrounds enhance policy effectiveness. This study provides empirical evidence for understanding how local green credit policies drive green transition of enterprises, identifies critical enterprise characteristics requiring nuanced consideration during policy implementation, and offers practical insights for ensuring policy fairness and effectiveness.

Local Green Credit Policies, Green Transition, Green Development, Credit Financing, Enterprises “Greenwashing”