The Impact of the Green Finance Reform and Innovation Pilot Zone on the Green Innovation—Evidence from China

Abstract

This article uses the “Green Finance Reform and Innovation Pilot Zone” promulgated in 2017 as an example to construct a quasi-natural experiment and uses the difference-in-difference method to test the impact of the implementation of the “Green Finance Reform and Innovation Pilot Zone” on the green innovation activities. It was found that the policy promotes the quantity and quality of corporate green innovation. The mechanism test showed that policy promotes the R&D investment and expands the credit scale. The study further found that green finance policies enhance the green innovation of enterprises as government environmental regulation is strengthened. Finally, green innovation by state-owned enterprises is more strongly promoted in the pilot green finance reform and innovation zones, and green innovation by enterprises in non-polluting sectors is more sensitive to the policy, with a heterogeneous pattern of policy effects in eastern and non-eastern China. Therefore, green finance policies should be promoted to achieve an effective combination of financial resource allocation and corporate green innovation to promote the construction of ecological civilization.

Can green finance promote urban green development? Evidence from green finance reform and innovation pilot zone in China

“…On the one hand, this result is consistent with and enriches the findings of Wang et al ( 2022 ) and Zhang and Li ( 2022 ); their study verified the promotion effect of the GFPZ policy on green technology innovation by using data from provinces and enterprises respectively. The GFPZ policy directs more capital to the cleaner production field, enabling green enterprises to receive large amounts of financial support, relieving the pressure on enterprises’ innovation costs, and enhancing green enterprises’ innovation incentives.…”

“…At the micro level, Zhang and Lu ( 2022 ) use enterprise-level data; their findings indicate that the GFPZ policy can reduce illicit emissions. In addition, existing studies affirmed the positive effects of this policy on green innovation (Wang et al 2022 ; Wang et al 2021d ; Zhang and Li 2022 ) and on long-term enterprise value (Hu et al 2021 ). However, in the short term, the GFPZ policy significantly inhibits enterprise development in the pilot area, reducing the productivity of polluting enterprises.…”

Whether Green Finance Improves Green Innovation of Listed Companies—Evidence from China

“…The research object in this paper is similar to that of Zhang and Li [ 51 ], but the empirical method, variable selection, and mechanism paths are quite different. They used the difference-in-difference method to test the impact of the green finance reform and innovation pilot zone on green innovation activities.…”

“…The continuous DID model is used for presenting the volume of green finance, both in benchmark regression and heterogeneity analysis of different pilot zones. In the study of [ 51 ], the heterogeneity analysis selected sample-divided regression without introducing a triple-difference interaction term. In the mechanism analysis, our study selected debt financing cost (Debt) and long-term debt ratio (LDR) as mediating variables to test the internal mechanism of the GFRIPZ using stepwise regression test for coefficients, which is quite different from the research of Zhang and Li [ 51 ].…”

“…Contrary to that, the establishment of the GFRIPZ is a comprehensive green finance policy that marks the encouragement of pilot provinces to establish a thorough green financial system. Third, although the establishment of the GFRIPZ has attracted attention from some scholars [ 10 , 49 , 50 , 51 ], the previous studies fail to use comprehensive indicators to measure the effect of it. They generally use the single metrics to measure green innovation levels, which are deficient in the scope of empirical analysis.…”