DOES GREEN FINANCE POLICY IMPROVE THE QUALITY OF ENTERPRISES’ GREEN INNOVATION? EVIDENCE FROM CHINA

The impact of booming China’s green finance on the quality of enterprises’ green innovation is still unexplored. Taking the 2017 pilot zones for green finance reform and innovation (PZGFRI) as a quasi-natural experiment, a triple difference model (DDD) is applied to examine the effect of green finance policy on heavy-polluting enterprises’ green innovation quality. Our empirical analysis indicates that PZGFRI plays a negative role in the quality of heavy-polluting enterprises’ green innovation, and the results remain robust when subjected to various robustness tests. Further examination of the mechanism reveals that the breeding of rent-seeking behavior and the crowding-out effect of research and development (R&D) are transmission channels for the inhibiting effect of PZGFRI on heavy-polluting enterprises’ green innovation quality. Finally, the heterogeneity analysis indicates that the negative effect of PZGFRI on heavy-polluting enterprises’ green innovation quality is more pronounced for private enterprises than for state-owned enterprises, and for green invention patents relative to utility models. This study sheds light on the promotion path of China’s green finance policy and enriches the research on green finance and green innovation.