Green credit policy, technological innovation, and corporate financial performance: Evidence from the energy industry

Despite extensive research on the impact of green policies on firm growth and performance, there has been little effort dedicated to understanding the effect of green credit policies on firms. In this article, we fill this gap by investigating the effect of green credit policy on financial performance. Additionally, we examine the moderating role of technological innovation in this relationship. Using data from listed companies in the energy sector, our findings reveal that green credit policies negatively affect financial performance. However, this negative impact is ameliorated at a high level of technological innovation (e.g., high‐technology and green patents). Specifically, the mechanism analysis reveals enterprises with high‐tech invention patents convey positive prospects to investors, whereas green patents signal firms' green innovation capabilities, thereby attracting external financing. Moreover, our findings revealed that environmental performance attenuates the negative effect of green credit policy on financial performance. Our heterogeneity analysis reveals that invention patents significantly benefit the financial performance of state‐owned and large enterprises in the traditional energy sector, whereas green patents have a positive effect in the new energy sector, predominantly for non‐state‐owned and smaller companies. These findings offer both theoretical and policy implications for sustainability research and practice.