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Green finance and green innovation: Theoretical analysis based on game theory and empirical evidence from China

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  • Bai, Rui
  • Lin, Boqiang

Abstract

By applying evolutionary game analysis and using a panel of Chinese listed companies, this paper concludes that green finance has a significant role in promoting green innovation from both theoretical and empirical aspects. After using alternative measurement and estimation methods of the core variables, the above conclusions are still robust. In addition, considering the endogeneity, this paper regards the establishment of the pilot zones for green finance reform and innovations as a quasi-natural experiment. It analyzes the policy effect of green finance policy on green innovation by applying the Differences-in-Differences model, as the conclusion is consistent with the above. Finally, this paper takes micro-level evidence to investigate the impact of corporate risk-taking on the relationship between green finance and green innovation. Evidence from this study suggests that green finance has a stronger positive effect on green innovation when firms have a lower risk-taking level. These results have certain practical significance for guiding coordinated development and low-carbon transition.

Suggested Citation

  • Bai, Rui & Lin, Boqiang, 2024. "Green finance and green innovation: Theoretical analysis based on game theory and empirical evidence from China," International Review of Economics & Finance, Elsevier, vol. 89(PA), pages 760-774.
    • Handle: RePEc:eee:reveco:v:89:y:2024:i:pa:p:760-774
    DOI: 10.1016/j.iref.2023.07.046
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    Cited by:

    1. Xie, Qichang & Wang, Dong & Bai, Qianwen, 2024. "“Cooperation” or “competition”: Digital finance enables green technology innovation—a new assessment from dynamic spatial spillover perspectives," International Review of Economics & Finance, Elsevier, vol. 93(PB), pages 587-601.
    2. Bai, Rui & Lin, Boqiang, 2024. "An in-depth analysis of green innovation efficiency: New evidence based on club convergence and spatial correlation network," Energy Economics, Elsevier, vol. 132(C).
    3. Giorgio Calcagnini & Germana Giombini & Edgar J. Sanchez Carrera, 2024. "Bank Lending Policies and Green Transition," Working Papers - Economics wp2024_16.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    4. Ma, Yanbai & Lu, Ling & Cui, Jingbo & Shi, Xunpeng, 2024. "Can green credit policy stimulate firms’ green investments?," International Review of Economics & Finance, Elsevier, vol. 91(C), pages 123-137.
    5. Xu, Pei & Ye, Penghao & Zhao, Fan & Jahanger, Atif, 2024. "Technology spillover and market competitiveness in green credit induced corporate green innovation: An evolutionary game theory and empirical study," Technological Forecasting and Social Change, Elsevier, vol. 207(C).

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