Does digital finance matter for corporate green investment? Evidence from heavily polluting industries in China

Green investment is an important way to strengthen pollution control and improve environmental quality. In the context of the rapid development of the digital economy, digital finance may be an important engine for corporate green investment. This study investigates the effect of digital finance development on corporate green investment based on data from heavily polluting industries in China from 2011 to 2020. The result suggests that digital finance greatly increases corporate green investment, and this finding still holds after a series of robustness tests. This is demonstrated by the fact that the coverage breadth and digitalization of digital finance significantly promote green investment. Digital finance mainly promotes green investment by stimulating intra-firm capital flows and intensifying market competition. The driving effects of digital finance on green investment are stronger in state-owned enterprises and in regions where environmental and financial regulations are more stringent. Our findings provide empirical inspiration for understanding how firms carry out environmental governance under the development of emerging financial market services.