Green finance policy and enterprise green development: Evidence from China

Abstract

Global environmental issues are becoming increasingly prominent, and green finance may play a key role in achieving sustainable development. This study takes the “Green Financial Reform and Innovation Pilot Zone” policy as a quasi‐natural experiment. The Difference‐in‐Difference model and Propensity Score Matching‐Difference in Difference model are applied to examine the direct effect of green finance policy on the green development of enterprises. A mechanism test model is used to investigate its indirect transmission mechanism. Then several heterogeneity analyses are performed from five perspectives. The results show that green finance policy considerably promotes enterprise green development and the conclusion is supported by a series of robustness tests. The mechanism analyses show that financing constraints and green innovation are the two transmission channels for green finance policy affecting enterprise green development. The heterogeneity analyses indicate that the policy effect is more significant among enterprises those are non‐state‐owned, have managers with a financial background, operate in regions with high marketization, belong to industries with low monopoly, and locate in poilt zones of Zhejiang, Guangdong, and Guizhou. Based on the above findings, policy suggestions are made to establish a win‐win scenario for the economy and the environment.

Striving for sustainable development: Green financial policy, institutional investors, and corporate ESG performance

“…The resource effect refers to the capability of GFP to offer policy support for companies to participate in ESG activities. The GFP is an integrated policy with various green financial products such as green credit, green bonds, green insurance, and so on (Lyu et al, 2023).…”

“…The difference-in-differences (DID) approach has been widely used in the literature to study the consequences of green financial policy (see e.g., Cen, 2023;Chen et al, 2023;Fan et al, 2021;Lyu et al, 2023), which helps mitigate the endogeneity problem (Chen & Xie, 2022). To examine the causal relationship between green financial policy and corporate ESG performance, we take the GFP as a quasi-natural experiment to construct a DID framework.…”

“…Scholars show that the GFP affects firms' financing costs (Shi et al, 2022) through resource allocation, and thus has an impact on investment efficiency (Yan et al, 2022). In addition, some scholars provide empirical evidence that GFP motivates companies to engage in innovative activities (Liu & Xiong, 2022), especially green innovation (Huang, Mbanyele, et al, 2022; Xu, Zhu, & Wang, 2023), and thus improve their green development (Lyu et al, 2023).…”

“…The resource effect refers to the capability of GFP to offer policy support for companies to participate in ESG activities. The GFP is an integrated policy with various green financial products such as green credit, green bonds, green insurance, and so on (Lyu et al, 2023). Through green monetary policy (Dikau & Volz, 2023), the central bank and local financial sectors can allocate financial resources to facilitate the ESG development of companies.…”

“…Since 2017, China has gradually established national pilot zones in some selected regions to promote green finance reform and innovation. Referring to the existing literature (see e.g., Hou et al, 2023; Huang, Mbanyele, et al, 2022; Lyu et al, 2023), we set a dummy variable to capture the treatment effect of GFP. The value of 1 is taken if firm is located in pilot regions in year ; otherwise, the value of 0 indicates that firm is located in non‐pilot regions in year .…”