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Can green finance policies promote substantive green transformation in firms? Evidence from the risk-taking and market competition

Author

Listed:
  • Zhang, Aiping
  • Zhang, Hongze
  • Meng, Jixian
  • Li, Wei
  • Zhang, Yu

Abstract

This study investigates the impact of China’s pilot zones for green finance reform and innovations on firms’ substantive green innovation via a staggered difference-in-differences approach, using A-share listed firms’ data (2013–2023). Results show the policy significantly boosts firm green transformation, mainly by enhancing firms’ risk-taking capacity and intensifying market competition to trigger "competitive escape". The effect is more pronounced in large firms, those with low human capital endowments, and short-sighted management. Findings provide empirical evidence for optimizing green finance policies and expanding their implementation.

Suggested Citation

  • Zhang, Aiping & Zhang, Hongze & Meng, Jixian & Li, Wei & Zhang, Yu, 2026. "Can green finance policies promote substantive green transformation in firms? Evidence from the risk-taking and market competition," Finance Research Letters, Elsevier, vol. 90(C).
    • Handle: RePEc:eee:finlet:v:90:y:2026:i:c:s1544612325021440
    DOI: 10.1016/j.frl.2025.108891
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    Keywords

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    JEL classification:

    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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