The policy effect of green finance reform and innovations: Empirical evidence at the firm level

Abstract

The Chinese central government established eight pilot zones in five provinces for green finance reform and innovations (GFRI) in 2017. The pilot zones promote green finance development and explore the propagable and reproducible experiences regarding mechanisms and institutions. Adopting a sample of China’s listed companies from 2012 to 2021, this paper constructed a quasi-natural experiment and investigated the GFRI policy’s effect on firms’ total factor productivity (TFP) using the difference-in-differences (DID) method to verify the implementation effect of the GFRI policy. Furthermore, heterogeneity analysis and mechanism analysis were conducted to identify the guidance effect and deep mechanisms of the GFRI policy. The empirical results demonstrated that firms’ TFP in pilot zones increased substantially after implementing the GFRI pilot policy, confirming that the policy had a strong incentive effect. The corresponding promoting effect was particularly significant for non-state-owned companies, the eastern and central regions, and firms in the growth stage. Further mechanism analysis revealed that the GFRI pilot policy can stimulated firms’ TFP by promoting technological innovation and improving resource allocation efficiency. This paper’s empirical findings are essential in improving relevant policies and expanding the pilot zones.

Effect of Green Financing and Financing Constraints on Green Technology Innovation in the Consumer Goods Industry in Indonesia

“…Whereas in research by Shang et al (2022) green financing as measured by logarithm of CSR can promote corporate innovation, because CSR can reduce the company's funding costs, but also spends too many resources on unproductive activities. Then in research by Dong & Tao (2022) green financing in the pilot zone has a positive impact on the company's total factor productivity. Therefore, the government should continue pilot policies and improve them, thereby increasing investment in green financing facilities and strengthening environmental risk awareness of financial institutions and companies.…”