Research on the impact of green finance policies on natural environment changes—a quasi-natural experiment based on green finance reform and innovation pilot zones

Abstract

This paper examines whether China's green finance reform pilot zones improve environmental performance and how such effects are transmitted. The 2017 pilot-zone policy provides a quasi-natural experimental setting for the analysis. Observations covering 2013–2021 are examined through a Difference-in-Differences (DID) approach. The estimation result shows an improvement in environmental performance after the green finance pilot zones were introduced. This effect is regionally heterogeneous, with a stronger influence in eastern China than in western China. A mediation model further indicates that the policy effect is an important channel: green finance influences market behavior and thereby contributes to environmental improvement. These results provide evidence for policymakers seeking to use green finance as a tool for environmental governance.