Abstract
While now appears appropriate to assert that digital finance can relieve firms’ financing constraints, the picture of whether it can improve enterprises’ green investment is much less clear. Using 2011–2019 data for Chinese listed heavily polluting (HP) enterprises, we examine the effects of digital finance on corporate green investment. Results show that digital finance impedes HP firms’ green investments, and this finding is robust to various tests, including the instrumental variable approach, exogenous shock, and alternative measures of variables. Additional tests reveal that digital finance increases firms’ financial investment, which crowds out green investment. Also, this inhibitory impact varies with firms’ geographical location, industry characteristics, and the implementation of the new Environmental Protection Law. The findings of this study provide new perspectives on digital finance by identifying its negative impact on the corporate green environment. We also propose corresponding policy recommendations, including strengthening the regulation and guidance of digital finance development, reducing monopolies in the financial sector, and formulating differentiated environmental policies.
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Data availability
The datasets used during the current study are available from the corresponding author on reasonable request.
Notes
Compared with the definition of financial assets in Chinese Accounting Standards, this study excludes the item of cash and cash equivalents, and includes investment properties, primarily because cash funds are mostly held by enterprises for the day-to-day operation rather than capital appreciation, while Chinese enterprises hold investment properties primarily for capital gain rather than operational purposes.
The development of digital finance is strongly dependent on the development of Internet technology. The initial development of the Internet started with telephone line dial-up access (PSTN), followed by broadband access technologies such as ISDN and ADSL. Since the initial development of digital finance depended on the popularity of landline telephones, it is highly likely that regions with higher penetration rates of landline telephones were also the regions with higher penetration of Internet and digital finance. Thus, the number of fixed telephones satisfies the requirement of relevance.
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YJ chose the research ideas, formed the study framework, collected, and analyzed the data; CG was the main contributor in writing the manuscript and also collected some of the data; YW reviewed and edited the paper. All authors read and approved the final manuscript.
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Jiang, Y., Guo, C. & Wu, Y. Does digital finance improve the green investment of Chinese listed heavily polluting companies? The perspective of corporate financialization. Environ Sci Pollut Res 29, 71047–71063 (2022). https://doi.org/10.1007/s11356-022-20803-z
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DOI: https://doi.org/10.1007/s11356-022-20803-z