Does environmental pollution liability insurance affect corporate green innovation? New evidence from China

Abstract

The effect of the development of green finance (GF) on the green transformation of corporations has been a key research issue in recent years. This study is based on a list of companies insured under the environmental pollution liability insurance (EPI) announced by the Ministry of Ecology and Environment (formerly the Ministry of Environmental Protection) in 2014 and 2015. Considering A-share listed companies in China as research samples and using the DID model, we investigate the impact of EPI on corporate green innovation (CGI). The results show that EPL can significantly promote the green innovation level of insured corporations, mainly reflected in two aspects of green invention patents and green utility model patents; this positive effect is more obvious in non-state-owned, heavily polluting, and patent-intensive corporations. These results hold after the robustness test. The mechanism analysis reveals that EPL promotes corporate green innovation by alleviating corporate financing constraints. This study provides new evidence for the role of GF in promoting green innovation and transformation in China.