Does Green Finance Reform Promote Corporate Long-Term Investment? Evidence from China

Abstract

We study the effects of green finance reform on firms’ long-term investment using data from a Chinese green finance pilot policy introduced in 2017 and panel data on listed firms covering an eleven-year period. We find that the policy significantly increases long-term investment, with the effect accounting for approximately 17.86% of the sample mean. This positive effect mainly operates by easing firms’ financing constraints, improving firms’ financing maturity structure, and mitigating uncertainty at both the operational and market levels. Heterogeneity analyses reveal that the policy effect is more pronounced among mature firms, non-state-owned enterprises, firms with financially experienced directors, supervisors, and senior managers, and those in non-pollution-intensive industries and competitive markets.