Abstract: Using a sample of Chinese A-share listed companies from 2009 to 2023, this paper examines whether the green credit policy affect the default risk of enterprises. The findingss indicate that the implementation of the green credit policy generally reduces the default risk of heavily polluting enterprises, especially in state-owned enterprises or firms with more substantial external supervision and a higher level of information disclosure. It can also be observed that this policy decreases heavily polluting enterprises' default risk mainly by lowering their debt levels and incentivizing corporate innovation. Dynamic test results show that in the short term, the decrease in corporate equity market value resulting from policy implementation outweighs the reduction in debt size. Subsequently, however, the effect of this policy on the reduction of their default risk is gradually enhanced with time. The potential benefits brought by encouraging enterprises to carry out technological innovation can also explain the long-term decline of their default risk. This study enriches the discussion on green credit policies and the influencing factors of default risk, and also clarifies the dynamic impact and potential mechanism through which green credit policies affect the default risk of heavily polluting enterprises.