Does digital finance promote the green innovation of China's listed companies?

As the world's largest manufacturing country, China has been the object of considerable concern for the international community, specifically with regard to China's environmental pollution and carbon emissions. Meanwhile, the rise of digital finance in China has been having an increasingly extensive impact. In this context, this research is devoted to testing the role of digital finance in promoting green innovation; this is done by using the 2011 to 2018 data of Chinese A-share listed companies. The baseline results show that, on average, every 1% increase in digital finance will lead to a 0.82% increase in green innovation, with a significant level of 1%. After changing the measurement method of core explanatory variables, removing samples from the financial industry, further adding control variables at the regional level, and using instrumental variable regression, the baseline results stay robust. Further dynamic analysis shows that digital finance has a lasting promoting effect. A mechanism analysis shows that digital finance alleviates the financing constraints of listed companies and improves the overall innovation of the relevant city, thus improving green innovation ability. The positive impact of digital finance is more prominent in state-owned enterprises, economically-developed eastern regions, and high-pollution industries. Meanwhile, digital finance also retains a certain degree of significance in private enterprises, central and western regions, and low-pollution industries. This work provides empirical evidence of China's high-quality development based on digital finance. The results also have implications for major global economies in terms of meeting their carbon targets.