Green Finance Policy and Corporate Green Innovation: Empirical Evidence from Green Finance Reform and Innovation Pilot Zones

Abstract

Green innovation is characterized by both dual externalities and long cycles, and generally faces financing constraints and governance deficiencies. Relying solely on market mechanisms is insufficient to fully unleash the vitality of corporate green innovation. Using Shanghai and Shenzhen A-share listed companies from 2014 to 2024 as the research sample and leveraging the staggered establishment of green finance reform and innovation pilot zones as a quasi-natural experiment, this paper constructs a multi-period difference-in-differences (DID) model to systematically examine the micro-level incentive effects and transmission mechanisms of the pilot zone policies, analyzing them through the dual dimensions of innovation intensity and innovation willingness. Empirical results indicate that the policy establishing pilot zones for green finance reform and innovation significantly boosts the level of green innovation among enterprises within these jurisdictions. Specifically, the volume of green patent applications by pilot enterprises increased by an average of 12.92% compared to non-pilot enterprises. The policy exhibits both a corporate governance substitution effect and an information disclosure extension effect, demonstrating a more pronounced promotional impact on innovation among enterprises with weak internal governance foundations or inadequate environmental information disclosure, thereby reflecting a mechanism that addresses and remedies specific weaknesses. The marginal contributions of this paper are threefold: It first replaces the focus on single green financial instruments with comprehensive policy pilots, employs a multi-period difference-in-differences (DID) approach to mitigate endogeneity issues, and refines the measurement system for green innovation across dual dimensions. It also transcends the limitations of existing literature, which largely focuses on the financing constraint channel, by revealing the dual functions of green finance in resource allocation and external governance. Finally, it characterizes the heterogeneous effects of the policy across different types of firms, providing micro-level empirical evidence to support targeted policy implementation and differentiated empowerment of corporate green innovation.