Can Green Financial Reform Policies Promote Enterprise Development? Empirical Evidence from China

Abstract

Green finance is considered a viable way to promote sustainable economic development and can effectively enhance enterprise development by alleviating financing constraints and eliminating liquidity risk. The Chinese government has formulated many policies to promote sustainable and enterprise development, including the green financial reform policy, but the implementation of the green financial reform policy is still unclear. In this context, this study employs the difference in difference (DID) method to evaluate the impact of green financial reform policy on enterprise development by using the data of 33,539 Chinese enterprises from 2007 to 2021. The empirical findings indicate that the green finance pilot policy posed a significant impact on the enterprises’ development level. The green financial reform policy accelerates enterprise development by reducing enterprise financing constraints, increasing the number of government subsidies received by enterprises, and improving corporate social responsibility. In addition, the green financial policy reform has varying impacts on various types of enterprises. The results further indicate that it has promoted advancing state-owned enterprises and low-polluting enterprises’ development toward high quality. In contrast, it has not played a similar role for non-state-owned enterprises and high-pollution enterprises. Based on the results, important policy implications are suggested to promote enterprises’ sustainable and high-quality development.