Green bond issuance and green innovation: Evidence from China's energy industry

Abstract

This paper investigates the impact of green bond issuance on green innovation and the associated mechanisms in China's energy industry. Using the panel data of Chinese listed energy firms in the A-share market from 2010 to 2022, we construct a difference-in-differences (DID) model to access relevant empirical results. The results suggest that green bond issuance contributes to both the quantity and quality of energy firms' green innovation and, from the perspective of the quantitative and structural effects of corporate funding, we find that alleviating financing constraints and the maturity mismatch between investment and financing are the two potential channels for this effect. Moreover, we find that the driving effect of green bond issuance on green innovation is more pronounced for larger energy firms, firms in the clean energy sector, eastern energy firms, and those with weak entrepreneurial R&D initiatives.