Skip to main content

Advertisement

SpringerLink
Log in

Does green finance promote green innovation? Evidence from China

  • Research Article
  • Published:
Environmental Science and Pollution Research Aims and scope Submit manuscript

Abstract

The green finance sector is key to accelerating the green transformation of economic structures and promoting green economic growth. However, understanding how to effectively combine green finance and green innovation is still in the exploratory stage. Using the implementation of the Green Credit Guidelines (hereinafter Guidelines) in 2012 as a quasi-natural experiment, we examine the causal relationship between green finance and green innovation. According to our findings, the green innovation performance of green credit-restricted industries improved significantly after the implementation of the Guidelines, although quality improvements of green innovation were not evident. This was a result of improved management efficiency and investment efficiency. Additionally, the Guidelines appear to have a more positive impact on green innovation for firms with lower levels of managerial short-termism or firms in regions with stronger environmental law enforcement. Green innovation can significantly enhance the environmental and social performance of a company.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3
Fig. 4

Similar content being viewed by others

Data availability

The datasets used and/or analyzed during the current study are available from the corresponding author upon reasonable request.

References

  • Acemoglu D, Akcigit U, Hanley D, Kerr W (2016) Transition to clean technology. J Polit Econ 124(1):52–104

    Article  Google Scholar 

  • Aghion P, Bénabou R, Martin R, Roulet A (2020) Environmental preferences and technological choices: is market competition clean or dirty? National Bureau of Economic Research

  • Amore MD, Bennedsen M (2016) Corporate governance and green innovation. J Environ Econ Manag 75:54–72

    Article  Google Scholar 

  • Andersen DC (2017) Do credit constraints favor dirty production? Theory and plant-level evidence. J Environ Econ Manag 84:189–208

    Article  Google Scholar 

  • Asni N, Agustia D (2022) Does corporate governance induce green innovation? An emerging market evidence. Corporate Governance, ahead-of-print

  • Beck T, Levine R, Levkov A (2010) Big bad banks? The winners and losers from bank deregulation in the United States. J Financ 65(5):1637–1667

    Article  Google Scholar 

  • Berrone P, Fosfuri A, Gelabert L, Gomez-Mejia LR (2013) Necessity as the mother of ‘green’inventions: institutional pressures and environmental innovations. Strateg Manag J 34(8):891–909

    Article  Google Scholar 

  • Brauer MF (2013) The effects of short-term and long-term oriented managerial behavior on medium-term financial performance: longitudinal evidence from Europe. J Bus Econ Manag 14(2):386–402

    Article  Google Scholar 

  • Brochet F, Loumioti M, Serafeim G (2015a) Speaking of the short-term: disclosure horizon and managerial myopia. Social Science Electronic Publishing

  • Brochet F, Loumioti M, Serafeim G (2015b) Speaking of the short-term: disclosure horizon and managerial myopia. Rev Acc Stud 20(3):1122–1163

    Article  Google Scholar 

  • Caliendo M, Kopeinig S (2008) Some practical guidance for the implementation of propensity score matching. J Econ Surv 22(1):31–72

    Article  Google Scholar 

  • Chava S, Livdan D, Purnanandam A (2009) Do shareholder rights affect the cost of bank loans? Rev Financ Stud 22(8):2973–3004

    Article  Google Scholar 

  • Chen Y, Podolski EJ, Veeraraghavan M (2015) Does managerial ability facilitate corporate innovative success? J Empir Financ 34:313–326

    Article  Google Scholar 

  • Demerjian P, Lev B, McVay S (2012) Quantifying managerial ability: a new measure and validity tests. Manage Sci 58(7):1229–1248

    Article  Google Scholar 

  • Dean TJ, Brown RL (1995) Pollution regulation as a barrier to new firm entry: initial evidence and implications for future research. Acad Manag J 38(1):288–303

    Article  Google Scholar 

  • D’Orazio P (2022) Mapping the emergence and diffusion of climate-related financial policies: evidence from a cluster analysis on G20 countries. International Economics 169(C):135–147

    Article  Google Scholar 

  • Fu L, Yi Y, Wu T, Cheng R, Zhang Z (2022) Do carbon emission trading scheme policies induce green technology innovation? New evidence from provincial green patents in China. Environ Sci Pollut Res

  • Goetz MR (2019) Financing conditions and toxic emissions

  • Guan T, Zhang A, Liu L (2019) On appropriately sequencing in China’s financial opening up around the “three-in-one”. In The Fundamental Dynamic Effect on Reform and Opening in China (pp. 329–355). Brill

  • Hambrick DC, Mason PA (1984) Upper echelons: the organization as a reflection of its top managers. Acad Manag Rev 9(2):193–206

    Article  Google Scholar 

  • He L, Zhang L, Zhong Z, Wang D, Wang F (2019) Green credit, renewable energy investment and green economy development: empirical analysis based on 150 listed companies of China. J Clean Prod 208:363–372

    Article  Google Scholar 

  • Hirshleifer D, Thakor AV (1992) Managerial conservatism, project choice, and debt. Rev Financ Stud 5(3):437–470

    Article  Google Scholar 

  • Holmstrom B (1989) Agency costs and innovation. J Econ Behav Organ 12(3):305–327

    Article  Google Scholar 

  • Huang J-W, Li Y-H (2017) Green innovation and performance: the view of organizational capability and social reciprocity. J Bus Ethics 145(2):309–324

    Article  Google Scholar 

  • Kang S, Chung CY, Kim D-S (2019) The effect of institutional blockholders’ short-termism on firm innovation: evidence from the Korean market. Pac Basin Financ J 57:101188

    Article  Google Scholar 

  • Klassen RD, McLaughlin CP (1996) The impact of environmental management on firm performance. Manage Sci 42(8):1199–1214

    Article  Google Scholar 

  • Laverty KJ (1996) Economic “short-termism”: the debate, the unresolved issues, and the implications for management practice and research. Acad Manag Rev 21(3):825–860

    Google Scholar 

  • Li F (2010) Textual analysis of corporate disclosures: a survey of the literature. Social Science Electronic Publishing, 29

  • Li D, Zheng M, Cao C, Chen X, Ren S, Huang M (2017) The impact of legitimacy pressure and corporate profitability on green innovation: evidence from China top 100. J Clean Prod 141:41–49

    Article  Google Scholar 

  • Lin W-L, Cheah J-H, Azali M, Ho JA, Yip N (2019) Does firm size matter? Evidence on the impact of the green innovation strategy on corporate financial performance in the automotive sector. J Clean Prod 229:974–988

    Article  Google Scholar 

  • Liu S, Xu R, Chen X (2021) Does green credit affect the green innovation performance of high-polluting and energy-intensive enterprises? Evidence from a quasi-natural experiment. Environ Sci Pollut Res 28(46):65265–65277

    Article  Google Scholar 

  • Liu X, Anbumozhi V (2009) Determinant factors of corporate environmental information disclosure: an empirical study of Chinese listed companies. J Clean Prod 17(6):593–600

    Article  Google Scholar 

  • Liu X (2022) Managerial myopia and firm green innovation: based on text analysis and machine learning. Front Psychol 13

  • Marginson D, McAulay L (2008) Exploring the debate on short-termism: a theoretical and empirical analysis. Strateg Manag J 29(3):273–292

    Article  Google Scholar 

  • Mikolov T, Sutskever I, Chen K, Corrado G, Dean J (2013) Distributed representations of words and phrases and their compositionality. Adv Neural Inf Proces Syst 26

  • Pan X, Cheng W, Gao Y, Balezentis T, Shen Z (2021) Is environmental regulation effective in promoting the quantity and quality of green innovation? Environ Sci Pollut Res 28(5):6232–6241

    Article  Google Scholar 

  • Porter ME (1995). Linde, Cvd (1995). Green and competitive: ending the stalemate. Harvard Bus Rev 73(5): 120–134

  • Qiu LD, Yu M (2020) Export scope, managerial efficiency, and trade liberalization: evidence from Chinese firms. J Econ Behav Organ 177:71–90

    Article  Google Scholar 

  • Richardson S (2006) Over-investment of free cash flow. Rev Acc Stud 11(2):159–189

    Article  Google Scholar 

  • Sachs JD, Woo WT, Yoshino N, Taghizadeh-Hesary F (2019) Importance of green finance for achieving sustainable development goals and energy security. In Handbook of Green Finance (pp. 3–12). Springer

  • Shao S, Hu Z, Cao J, Yang L, Guan D (2020) Environmental regulation and enterprise innovation: a review. Bus Strateg Environ 29(3):1465–1478

    Article  Google Scholar 

  • Song M, Wang S, Zhang H (2020) Could environmental regulation and R&D tax incentives affect green product innovation? J Clean Prod 258:120849

    Article  Google Scholar 

  • Su D, Lian L (2018) Does green credit policy affect corporate financing and investment? Evidence from publicly listed firms in pollution-intensive industries. J Financ Res 12(12):123–137

    Google Scholar 

  • Tan X, Yan Y, Dong Y (2022) Peer effect in green credit induced green innovation: an empirical study from China’s Green Credit Guidelines. Resour Policy 76:102619

    Article  Google Scholar 

  • Tang M, Walsh G, Lerner D, Fitza MA, Li Q (2018) Green innovation, managerial concern and firm performance: an empirical study. Bus Strateg Environ 27(1):39–51

    Article  Google Scholar 

  • Tolliver C, Fujii H, Keeley AR, Managi S (2021) Green innovation and finance in Asia. Asian Econ Policy Rev 16(1):67–87

    Article  Google Scholar 

  • Udayasankar K (2008) Corporate social responsibility and firm size. J Bus Ethics 83(2):167–175

    Article  Google Scholar 

  • van Leeuwen G, Mohnen P (2017) Revisiting the Porter hypothesis: an empirical analysis of green innovation for the Netherlands. Econ Innov New Technol 26(1–2):63–77

    Article  Google Scholar 

  • Yang Y, Su X, Yao S (2022) Can green finance promote green innovation? The moderating effect of environmental regulation. Environ Sci Pollut Res 1–14

  • Yao Q, Zeng S, Sheng S, Gong S (2021) Green innovation and brand equity: moderating effects of industrial institutions. Asia Pac J Manag 38(2):573–602

    Article  Google Scholar 

  • Yin C, Salmador MP, Li D, Lloria MB (2022) Green entrepreneurship and SME performance: the moderating effect of firm age. Int Entrep Manag J 18(1):255–275

    Article  Google Scholar 

  • Yu C-H, Wu X, Zhang D, Chen S, Zhao J (2021) Demand for green finance: resolving financing constraints on green innovation in China. Energy Policy 153:112255

    Article  Google Scholar 

Download references

Funding

This work was supported by the Zhejiang Provincial Philosophy and Social Science Planning Project (22NDJC015Z; 20NDJC225YB) and the Zhejiang Provincial Soft Science Project (2022C35080; 2022C35088; 2021C35020) and the Zhejiang Provincial Education Department (Y202250353).

Author information

Authors and Affiliations

  1. School of Economics and Management, Zhejiang Sci-Tech University, Hangzhou, 310018, China

    Xiaohui Xu

Authors
  1. Xiaohui Xu
    View author publications

    You can also search for this author in PubMed Google Scholar

Contributions

Xiaohui Xu contributed to the study’s conception and design. Material preparation, data collection, and analysis were performed by Xiaohui Xu. The first draft of the manuscript was written by Xiaohui Xu who commented on previous versions of the manuscript. Xiaohui Xu revised the manuscript and read and approved the final manuscript.

Corresponding author

Correspondence to Xiaohui Xu.

Ethics declarations

Ethics approval and consent to participate

Not applicable.

Consent for publication

Not applicable.

Competing interests

The author declares no competing interests.

Additional information

Responsible Editor: Nicholas Apergis

Publisher's note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Xu, X. Does green finance promote green innovation? Evidence from China. Environ Sci Pollut Res 30, 27948–27964 (2023). https://doi.org/10.1007/s11356-022-24106-1

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11356-022-24106-1

Keywords

Search

Navigation