Does Green Finance Reform Promote Corporate Green Innovation? Evidence from a Quasi-Natural Experiment

Abstract

Green innovation is an important tool in environmental management, and green finance can provide financial support for green innovation. The greening of the financial system has attracted attention. In order to promote the development of green finance, the Chinese government has implemented policy intervention in the financial market. Green finance reform differs from green credit policy, as it is a comprehensive green finance policy aimed at the financial system. In order to study the policy effects of green finance reform on corporate green innovation, this paper applies the green finance reform that the Chinese government introduced in 2017 as a quasi-natural experiment and implements the difference-in-difference (DID) method to investigate the impact of green finance reform on corporate green innovation. We found that green finance reform promotes corporate green innovation. The result remained valid after a series of robustness tests and is more prominent for state-owned enterprises (SOEs) and large enterprises. Furthermore, we examined the impact of green finance reform on different types of innovation, finding that it had a positive effect on green invention innovation and green utility model innovation. Mechanism tests showed that green finance reform promotes corporate green innovation by alleviating financial constraints.