Can the Green Finance Reform and Innovation Improve Green Investment of Heavily Polluting Enterprises?

Abstract

Determining whether the Green Finance Reform and Innovation Pilot Zone (GFRI) promotes the green investment (GI) of enterprises is practically important for China to achieve the “double carbon” goal early. This study examines the effect of GFRI on GI by the relevant data of listed heavily polluting enterprises in China from 2011 to 2020 and a difference-in-difference model. The results show that GFRI improves the GI of enterprises, and GFRI can enhance GI by promoting reputational costs and loan scale. The improvement effect is also more significant for state-owned enterprises, enterprises with high financing constraints, enterprises in regions with high environmental regulation intensity, and enterprises with executives’ financial backgrounds. The improvement in GI can further enhance the value of enterprises after the implementation of GFRI. The study provides a direct answer to the key question of whether the GFRI can actually support high-quality economic development.