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Green bonds and firm-level green transformation: Evidence from a quasi-natural experiment in China

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  • Guo, Bing
  • He, Jian
  • Sheng, Hualiang

Abstract

Against this background in the promotion of the high-quality economic development and the green transformation of China corporations, this paper explores the economic role of green finance with special attention to green bonds. As an illustration, we use panel data of listed companies in China A-share, between 2007 and 2022, to construct fairness indicators of green transformation and a difference-in-differences (DID) design to measure the effect of green bonds issue. The empirical results reveal that issuing green bonds has a considerable positive effect in enhancing corporate green transformation though with lag effect. Besides, green bonds enhance the financial performance of firms and the quality of ESG disclosure hence, supporting their future economic sustainability and competitiveness. These findings give reason to believe that green bonds are not only effective financing instruments that can be used to ensure sustainability but also help to allocate the capital and minimize a financing constraint. The work has significant policy and administrative implication of enhancing the green financial system by advancing business enterprises to use monetary instruments to enhance low-carbon growth, technological innovations, and sustainable economic expansion.

Suggested Citation

  • Guo, Bing & He, Jian & Sheng, Hualiang, 2026. "Green bonds and firm-level green transformation: Evidence from a quasi-natural experiment in China," Economic Analysis and Policy, Elsevier, vol. 90(C), pages 148-159.
    • Handle: RePEc:eee:ecanpo:v:90:y:2026:i:c:p:148-159
    DOI: 10.1016/j.eap.2026.01.016
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