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Financial investment and green development: How does financialization affect green total factor productivity?

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  • Li, Sijing
  • Yin, Yingkai
  • Jiao, Zeyan
  • Zhao, Qiuyun

Abstract

In China's transition to high-quality economic development, does corporate financial investment activity affect green production? We use nonfinancial listed companies to empirically test the inverted U-shaped relationship between corporate financialization and green total factor productivity (GTFP). The results show that green innovation and green investment are the main mechanisms. Heterogeneity analysis reveals that GTFP increases for enterprises in heavily polluting industries. Additionally, managers with financial backgrounds can partially mitigate the negative effects of financialization on GTFP. Finally, we measure the degree of deviation between enterprises’ financialization level and the optimal financialization level, finding that the lower the degree of deviation, the higher the GTFP level.

Suggested Citation

  • Li, Sijing & Yin, Yingkai & Jiao, Zeyan & Zhao, Qiuyun, 2025. "Financial investment and green development: How does financialization affect green total factor productivity?," Finance Research Letters, Elsevier, vol. 78(C).
    • Handle: RePEc:eee:finlet:v:78:y:2025:i:c:s1544612325005215
    DOI: 10.1016/j.frl.2025.107258
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    3. Fan, Congying & Peng, Ke, 2025. "How does supply chain finance drive corporate green transition? The role of credit resource availability," Finance Research Letters, Elsevier, vol. 86(PA).

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