Will Green Finance Contribute to a Green Recovery? Evidence From Green Financial Pilot Zone in China.

Liansheng Zheng,Yueyue Liu,Wenwei Wang,Xiangyu Li,Juncheng Li,Jun Hu

doi:10.3389/fpubh.2021.794195

Abstract

In the post-epidemic era, green finance plays a more significant role in supporting the “green recovery” of the economy, so it is necessary to evaluate the implementation effect of previous green financial policies. In 2017, the green finance reform and innovation pilot zone set up in five provinces and autonomous regions made an exploration in the development of green finance. From the perspective of micro-enterprises, can this policy play a beneficial policy effect in the long run? Based on the quasi-natural experiment of green finance pilot, using the data of A-share listed companies, this paper empirically tests the impact of pilot policies on the long-term value of green enterprises in pilot areas. It is found that, compared with non-pilot zones, the green finance pilot enables a significant increase in the Tobin Q-measured value of green enterprises in the pilot zones. Heterogeneity analysis shows that green finance pilot has a more significant impact on non-state-owned enterprises, enterprises in traditional industries, large enterprises, and enterprises in the eastern region of China. Green finance pilot zone can achieve better policy effects in areas with stronger environmental impact regulation and higher financial development levels. The mechanism test shows that the green finance pilot affects the long-term value of green enterprises through the capital market effect improving the stock trading activity of enterprises and through the real effect improving the operational efficiency and profitability of enterprises. From the perspective of micro-enterprises, this paper enriches the research on the development effect of green finance and provides theoretical support for the effect evaluation of green finance pilot policies.

Highlights

The COVID-19 epidemic outbreak in early 2020 has made people more aware that the development of human society is always constrained by the natural environment, that economic development and growth should be well-coordinated with the protection of the natural ecological environment, and that any attempt to make the two in opposition shall be boomeranged
This paper takes the policy of green finance reform and innovation pilot zone in June 2017 as a quasi-natural experiment, and based on the relevant data of green enterprises in A-share listed companies; it examines the impact of green finance pilot policies on the long-term value of green enterprises in pilot areas by using double-difference method
The results show that the green finance pilot has significantly improved the enterprise value measured by Tobin Q in the long run and has a more significant impact on private enterprises, traditional industries, large enterprises, and green enterprises in the eastern region

Summary

Introduction

The COVID-19 epidemic outbreak in early 2020 has made people more aware that the development of human society is always constrained by the natural environment, that economic development and growth should be well-coordinated with the protection of the natural ecological environment, and that any attempt to make the two in opposition shall be boomeranged. To prevent similar tragedies from happening again, we must promote the green and low-carbon transformation of the economy and society and enhance the sustainability of economic growth. Green Finance and Enterprise Value impact of the COVID-19 epidemic, we must support and promote the “green recovery” of the economy, that is, in the post-epidemic era, the production and consumption return to the pre-epidemic level in terms of quantity and quality and achieve further growth while increasing the proportion of green consumption and green production, and thereby transforming the economic structure toward a green and sustainable direction. Finance should play an irreplaceable role in the process of economic “green recovery” in the post-epidemic era. Because there is a limited amount of financial funds and the need for complex relief should be given priority during the epidemic crisis, green finance can help fill the financing gap faced by green investment in the process of “green recovery” in the post-epidemic era

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Conclusion