IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v75y2025ics1544612325000029.html

Environmental courts, financing constraints, and corporate green innovation

Author

Listed:
  • Wang, Siheng
  • Zhang, Xin

Abstract

As environmental judicial reforms advance, environmental courts have become a crucial breakthrough in enhancing corporate environmental governance. This paper evaluates the impact of environmental courts on corporate green innovation, using panel data from Chinese A-share listed companies from 2003 to 2022. The study finds that the establishment of environmental courts can promote corporate green innovation, primarily by alleviating financing constraints. Based on the research findings, corresponding recommendations are proposed, offering practical significance and insights for promoting the synergy between environmental courts and sustainable economic development.

Suggested Citation

  • Wang, Siheng & Zhang, Xin, 2025. "Environmental courts, financing constraints, and corporate green innovation," Finance Research Letters, Elsevier, vol. 75(C).
    • Handle: RePEc:eee:finlet:v:75:y:2025:i:c:s1544612325000029
    DOI: 10.1016/j.frl.2025.106737
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612325000029
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2025.106737?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Du, Yanan & Guo, Qunna, 2023. "Green credit policy and green innovation in green industries: Does climate policy uncertainty matter?," Finance Research Letters, Elsevier, vol. 58(PC).
    2. Kampouris, Ilias & Mertzanis, Charilaos & Samitas, Aristeidis, 2022. "Foreign ownership and the financing constraints of firms operating in a multinational environment," International Review of Financial Analysis, Elsevier, vol. 83(C).
    3. Wang, Jun, 2023. "The impact of investor communication on enterprise green innovation," Finance Research Letters, Elsevier, vol. 57(C).
    4. Gao, Wei & Liu, Zebin, 2023. "Green credit and corporate ESG performance: Evidence from China," Finance Research Letters, Elsevier, vol. 55(PB).
    5. Xue, Dawei & Feng, Jiayin & zhu, Zhihong, 2023. "Governmental subsidies, corporate environmental investments and firm performance: Evidence based on oil & petroleum industry," Finance Research Letters, Elsevier, vol. 56(C).
    6. Tian, Ye & Chen, Songbo & Dai, Li, 2024. "How climate risk drives corporate green innovation: Evidence from China," Finance Research Letters, Elsevier, vol. 59(C).
    7. Li, Shiyu & Yang, Jun, 2024. "Administrative incentives and enterprise green innovation: Based on empirical evidence from China," Finance Research Letters, Elsevier, vol. 62(PA).
    8. Zhang, Jintao & Su, Taoyong & Meng, Li, 2024. "Retreat in order to advance: Environmental performance below legality aspiration and corporate disclosure strategy," International Review of Financial Analysis, Elsevier, vol. 93(C).
    9. Wang, Juxian & Ma, Mengdi & Dong, Tianyi & Zhang, Zheyuan, 2023. "Do ESG ratings promote corporate green innovation? A quasi-natural experiment based on SynTao Green Finance's ESG ratings," International Review of Financial Analysis, Elsevier, vol. 87(C).
    10. Liu, Xing & Liu, Fengzhong, 2022. "Environmental regulation and corporate financial asset allocation: A natural experiment from the new environmental protection law in China," Finance Research Letters, Elsevier, vol. 47(PA).
    11. Mertzanis, Charilaos, 2023. "FinTech finance and social-environmental performance around the world," Finance Research Letters, Elsevier, vol. 56(C).
    12. Marsat, Sylvain & Pijourlet, Guillaume & Ullah, Muhammad, 2022. "Does environmental performance help firms to be more resilient against environmental controversies? International evidence," Finance Research Letters, Elsevier, vol. 44(C).
    13. Gao, Yihong, 2022. "Green credit policy and trade credit: Evidence from a quasi-natural experiment," Finance Research Letters, Elsevier, vol. 50(C).
    14. Ma, Kelin, 2023. "Digital inclusive finance and corporate green technology innovation," Finance Research Letters, Elsevier, vol. 55(PB).
    15. Meng, Chenyang & Shi, Daqian & Wang, Bin, 2023. "The impact of green human capital of entrepreneur on enterprise green innovation: A study based on the theory of pro-environmental behavior," Finance Research Letters, Elsevier, vol. 58(PB).
    16. Xing, Chao & Zhang, Yuming & Tripe, David, 2021. "Green credit policy and corporate access to bank loans in China: The role of environmental disclosure and green innovation," International Review of Financial Analysis, Elsevier, vol. 77(C).
    17. Dong, Zhenlin & Li, Hong, 2023. "The impact of Confucianism on the efficiency of enterprises green innovation," Finance Research Letters, Elsevier, vol. 58(PA).
    18. Zhang, Qi & Yu, Zhi & Kong, Dongmin, 2019. "The real effect of legal institutions: Environmental courts and firm environmental protection expenditure," Journal of Environmental Economics and Management, Elsevier, vol. 98(C).
    19. Purcel, Alexandra-Anca, 2023. "Environmental protection expenditures and EU ETS: Evidence from Romania," Finance Research Letters, Elsevier, vol. 58(PB).
    20. Chen, Yu & Zhang, Yujiao & Wang, Mingshan, 2024. "Green credit, financial regulation and corporate green innovation: Evidence from China," Finance Research Letters, Elsevier, vol. 59(C).
    21. Sun, Guanglin & Fang, Jiming & Li, Ting & Ai, Yongfang, 2024. "Effects of climate policy uncertainty on green innovation in Chinese enterprises," International Review of Financial Analysis, Elsevier, vol. 91(C).
    22. Li, Bo & Du, Jianguo & Yao, Tianhang & Wang, Quanding, 2023. "FinTech and corporate green innovation: An external attention perspective," Finance Research Letters, Elsevier, vol. 58(PD).
    23. Li, Yujie & Hua, Ziyan, 2024. "Environmental protection tax law and corporate ESG performance," Finance Research Letters, Elsevier, vol. 64(C).
    24. Zhu, Zhaohui & Huang, Yang & Hu, Chao & Yan, Youliang, 2024. "The green effects of competition: administrative monopoly regulation and green innovation," Finance Research Letters, Elsevier, vol. 64(C).
    25. Gupta, Ranjan Das & Deb, Soumya G., 2023. "Interlinkage between corporate social, environmental performance and financial performance: Firm-mediators in a multi-country context," Finance Research Letters, Elsevier, vol. 52(C).
    26. Florackis, Chris & Fu, Xi & Wang, Jingjing, 2023. "Political connections, environmental violations and punishment: Evidence from heavily polluting firms," International Review of Financial Analysis, Elsevier, vol. 88(C).
    27. Jing, Ruifeng & Liu, Ruizhi, 2024. "The impact of green finance on persistence of green innovation at firm-level: A moderating perspective based on environmental regulation intensity," Finance Research Letters, Elsevier, vol. 62(PB).
    28. Liu, Meiling, 2024. "The impact of directors' foreign experience on corporate carbon emissions: A mediating perspective based on corporate green innovation," Finance Research Letters, Elsevier, vol. 62(PB).
    29. Li, Lu & Zhou, Shiqi & Xu, Wei & Dai, Jiapeng, 2024. "Green innovation's impact on corporate financing: New insights from BRICS economies," Finance Research Letters, Elsevier, vol. 62(PB).
    30. Wang, Xiaoqi & Guo, Yida & Fu, Shaozheng, 2024. "Will green innovation strategies trigger debt default risk? Evidence from listed companies in China," Finance Research Letters, Elsevier, vol. 62(PB).
    31. Li, Jinning & Kong, Tao & Gu, Liangliang, 2024. "The impact of climate policy uncertainty on green innovation in Chinese agricultural enterprises," Finance Research Letters, Elsevier, vol. 62(PA).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zhu, Junpeng & Qu, Yan & Zhao, Xiaomeng, 2025. "Environmental centralization and corporate sustainable development: Evidence from China," Energy Economics, Elsevier, vol. 152(C).
    2. Liu, Zilong & Chen, Rungen & Chen, Yu & Ye, Qian & Fang, Kanglan, 2025. "Law and governance in environmental oversight: The role of environmental courts in enhancing corporate information transparency," Finance Research Letters, Elsevier, vol. 80(C).
    3. Wu, Cuidan & Chui, Miaomiao & Yong, Chen & Ma, Liang, 2025. "Establishment of regional environmental courts, digital finance development, and corporate green innovation performance: A quasi-natural experiment based on the establishment of environmental courts," Finance Research Letters, Elsevier, vol. 85(PD).
    4. Han, Pengcheng & Wang, Shumin, 2025. "Does financial uncertainty reduce carbon emission reduction performance? Evidence from China’s manufacturing industry," Finance Research Letters, Elsevier, vol. 85(PE).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sun, Zhonghua & Wei, Wei, 2025. "Green technology innovation and corporate brand competitiveness: an analysis based on the role of environmental policy," Finance Research Letters, Elsevier, vol. 71(C).
    2. Dou, Weijian & Zhang, Han & Miao, Bowen & Wang, Bin, 2025. "How do analyst attention and green credit promote corporate green innovation?," International Review of Economics & Finance, Elsevier, vol. 99(C).
    3. Liao, Zhaoguang & Xiao, Luan, 2025. "Government environmental regulation, media attention, and corporate green innovation," International Review of Economics & Finance, Elsevier, vol. 97(C).
    4. Zhang, Shujun & Chen, Dingyang & Zou, Qifeng, 2025. "China's green transformation under the dual incentives of economic growth and environmental protection," International Review of Financial Analysis, Elsevier, vol. 102(C).
    5. Zhang, Xiping & Fu, Aimin & Hu, Guang, 2024. "Establishment of environmental courts and corporate green innovation," Finance Research Letters, Elsevier, vol. 69(PB).
    6. Yang, Jinxuan & Hui, Ning, 2024. "How digital finance affects the sustainability of corporate green innovation," Finance Research Letters, Elsevier, vol. 63(C).
    7. Zhang, Zhihe & Yu, Zaishui & Yao, Chengyu & Zhang, Zerui, 2025. "Environmental policy orientation and corporate green transformation: A study based on information disclosure perspective," Finance Research Letters, Elsevier, vol. 83(C).
    8. Shi, Hongyu & Zhou, Qun, 2024. "Government R&D Subsidies, Environmental regulation and corporate green innovation performance," Finance Research Letters, Elsevier, vol. 69(PB).
    9. Qiu, Weijian & Yang, Wenxuan & Qiu, Le, 2025. "Population aging, market competition and enterprise green innovation," Finance Research Letters, Elsevier, vol. 74(C).
    10. Lei, Hao & Gao, Renyuan & Ning, Chutong & Sun, Guanglin, 2025. "Green finance and corporate green innovation," Finance Research Letters, Elsevier, vol. 72(C).
    11. Yang, Junhua & Li, Ying & Zheng, Yu & Zhu, Mengqi & Shahab, Yasir & Ye, Chengang, 2025. "External audit quality and green innovation: Does environmental information disclosure matter?," International Review of Financial Analysis, Elsevier, vol. 103(C).
    12. Liu, Shimeng & Xiong, Xiong & Gao, Ya, 2025. "Market-based environmental regulations and green innovation: Evidence from the pilot carbon markets in China," Research in International Business and Finance, Elsevier, vol. 77(PA).
    13. Shi, Dinghao & Tan, Haoyu & Ling, Yixin & Liu, Yunuo & Liu, Bo & Tu, Yongqian, 2025. "Impact of environmental information uncertainty and market competition on corporate ESG performance," International Review of Financial Analysis, Elsevier, vol. 99(C).
    14. Zhang, Yanyuan & Ding, Yanqi & Yan, Weichen, 2025. "United in green: Institutional dual ownership and corporate green innovation," Finance Research Letters, Elsevier, vol. 84(C).
    15. Zhou, Yang & Su, Qian, 2025. "Environmental protection tax, management efficiency, and enterprise green technology innovation," Finance Research Letters, Elsevier, vol. 75(C).
    16. Bai, Rui & Wu, Huixuan & Tan, Zhizhou & Hong, Tao, 2025. "Green finance and green innovation: the Moderating role of ESG and synergies with inclusive finance," Research in International Business and Finance, Elsevier, vol. 79(C).
    17. Hu, Weixuan & Shi, Shuling, 2025. "CEO green background and enterprise green innovation," International Review of Economics & Finance, Elsevier, vol. 97(C).
    18. Zhou, Jian & Feng, Yin, 2025. "Climate risk, environmental supervision, and corporate green innovation," International Review of Financial Analysis, Elsevier, vol. 107(C).
    19. Sun, Lu & Zhou, Haizhen & Huang, Feng, 2025. "How the introduction of the “Dual Carbon” targets drives ESG disclosure in manufacturing enterprises?," International Review of Economics & Finance, Elsevier, vol. 101(C).
    20. Li, Haoran & Lu, Mingyu, 2025. "Implementation of the new environmental protection law, patient capital, and corporate sustainable development," Finance Research Letters, Elsevier, vol. 86(PA).

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finlet:v:75:y:2025:i:c:s1544612325000029. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.