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Does green finance reform promote corporate carbon emission reduction? Evidence from China's green finance reform and innovation pilot zones

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  • Han, Linzhi
  • Li, Jiawen

Abstract

Establishing a pilot zone for green finance reform (GFR) and innovation is an important practical way for China to achieve its dual carbon goal. Based on 2012-2021 carbon emission data on Chinese A-share listed companies, this paper uses a multiperiod DID model to explore the impact of the pilot policy on corporate carbon emission (CCE) reduction. The study finds that the establishment of a pilot zone for GFR and innovation can significantly reduce CCEs, which is verified by endogeneity and robustness tests. The mechanism test shows that the implementation of the pilot policy inhibits CCEs by improving the green innovation ability of enterprises. Moreover, an advanced regional industrial structure and foreign direct investment have a moderating effect on carbon emission reduction. The heterogeneity test finds that the establishment of a pilot zone is more significant in inhibiting the carbon emissions of non-state-owned enterprises, large-scale enterprises, and enterprises in areas with high levels of local financial development. This paper provides micro-evidence for testing the implementation effectiveness of the green finance pilot policy in China and provides Chinese experience for decision makers in various countries to develop green finance in top-level design and specific practices.

Suggested Citation

  • Han, Linzhi & Li, Jiawen, 2025. "Does green finance reform promote corporate carbon emission reduction? Evidence from China's green finance reform and innovation pilot zones," Economic Analysis and Policy, Elsevier, vol. 85(C), pages 2091-2111.
    • Handle: RePEc:eee:ecanpo:v:85:y:2025:i:c:p:2091-2111
    DOI: 10.1016/j.eap.2025.03.005
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    Keywords

    Green finance reform; Carbon emission reduction; Multiperiod difference-in-differences method; Green finance policy;
    All these keywords.

    JEL classification:

    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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