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Development of the green financial market, carbon emission trading, and corporate environmental responsibility

Author

Listed:
  • Xiao, Chengzhang
  • Xiao, Huihai

Abstract

This study focuses on Chinese-listed firms spanning the period 2007–2023, empirically investigating the impact pathways through which carbon emission trading (CET) and green finance market advancement influence corporate environmental responsibility (CER). The empirical results reveal that carbon ETS exerts a significantly positive effect on CER, while the growth of the green finance market also serves as an effective driver for enhancing corporate environmental commitments. Further analysis of the moderating effect demonstrates that the development of the green finance market plays a notable moderating role in the linkage between carbon CET and CER. Moreover, this moderating effect exhibits distinct variations across firms characterized by different levels of executive environmental awareness and under varying intensities of environmental regulation. The conclusions of this research offer a novel perspective for comprehending the intricate relationships among CET, green finance market development, and CER. Additionally, they offer practical insights for improving carbon market mechanisms and optimizing the allocation of green finance resources to promote corporate sustainable development.

Suggested Citation

  • Xiao, Chengzhang & Xiao, Huihai, 2026. "Development of the green financial market, carbon emission trading, and corporate environmental responsibility," Finance Research Letters, Elsevier, vol. 87(C).
    • Handle: RePEc:eee:finlet:v:87:y:2026:i:c:s1544612325023220
    DOI: 10.1016/j.frl.2025.109073
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    References listed on IDEAS

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