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Are green finance and inclusive finance complements or substitutes for MSMEs? – Evidence from China's green finance reform and innovation pilot zone

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  • Zhang, Siqi
  • Cheung, Adrian (Waikong)

Abstract

The objectives of inclusive finance and green finance are related but distinct. Inclusive finance aims to make financial products and services accessible and affordable for individuals and businesses, while green finance focuses on providing financial support for environmentally friendly investments. As China has implemented inclusive finance and green finance reform and innovation pilot zone policies where the reforms occur, pilot zones provide a natural quasi-experiment/setting to study the joint effect of green finance and inclusive finance. Using a sample of micro, small, and medium enterprises (MSMEs) from 2015 to 2019 in China, this paper uses Difference-in-Difference model to analyze the joint effect on the financing of MSMEs. The findings indicate that green finance and inclusive finance are complementary for green MSMEs but act as substitutes for polluting MSMEs. Additionally, the reforms have a more pronounced positive effect on the financing scale of state-owned green MSMEs.

Suggested Citation

  • Zhang, Siqi & Cheung, Adrian (Waikong), 2025. "Are green finance and inclusive finance complements or substitutes for MSMEs? – Evidence from China's green finance reform and innovation pilot zone," Energy Economics, Elsevier, vol. 141(C).
    • Handle: RePEc:eee:eneeco:v:141:y:2025:i:c:s014098832400834x
    DOI: 10.1016/j.eneco.2024.108125
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    More about this item

    Keywords

    Inclusive finance; Green finance; Micro; small; and medium enterprises; Financing;
    All these keywords.

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • 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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