Does green credit policy matter for corporate exploratory innovation? Evidence from Chinese enterprises

Green credit policy (GCP) plays a crucial role in guiding green development through financial resource allocation. It has been extended to various aspects of enterprise development and has a substantial impact on enterprise innovation. However, there is limited research that investigates the relationship between GCP and exploratory innovation. We utilize data from China’s listed enterprises from 2007 to 2017 to examine the impact of GCP on exploratory innovation using the PSM-DID method. We find that GCP significantly boosts corporate exploratory innovation, particularly for state-owned enterprises, industries with high capital intensity, and enterprises located in the central region of China. Additionally, GCP facilitates corporate exploratory innovation by effectively increasing R&D investment. Lastly, although higher financing constraints generally have a detrimental effect, the impact of GCP on corporate exploratory innovation becomes more pronounced as the degree of financing constraints increases. These findings have significant value for policymakers in optimizing GCP.