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Financial support for sustainability under environmental regulation: The role of patient capital

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  • Liu, Li
  • Chui, Miaomiao
  • Ma, Liang

Abstract

Amid increasingly stringent environmental regulations, the influence of green finance on promoting corporate and regional sustainability has gained growing attention, yet its underlying mechanisms and effective boundaries are insufficiently explored. This study constructs an analytical framework linking green finance, patient capital, and sustainable development using Chinese listed-firm and provincial data from 2010 to 2022 to examine whether green finance enhances corporate sustainability and regional sustainable development, and mediating mechanism of patient capital. The empirical results reveal that green finance significantly strengthens firms’ sustainable development capacity and environmental, social, and governance performance, while also improving regional sustainability. Patient capital—measured using relational debt and long-horizon institutional ownership—is a crucial transmission channel. In addition, green finance exhibits an inverted U-shaped effect, with stronger impacts in regions with a lower sustainability baseline and diminishing marginal effects in more developed regions. The results reveal the internal financial–governance mechanism through which green finance operates under environmental regulation and provides empirical evidence for optimizing the scale of green finance and designing region-specific green policy tools. Our findings provide valuable insights for refining long-term green transition strategies.

Suggested Citation

  • Liu, Li & Chui, Miaomiao & Ma, Liang, 2026. "Financial support for sustainability under environmental regulation: The role of patient capital," Finance Research Letters, Elsevier, vol. 91(C).
    • Handle: RePEc:eee:finlet:v:91:y:2026:i:c:s1544612325026637
    DOI: 10.1016/j.frl.2025.109414
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