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Financial risk prevention and corporate green innovation: A quasi-natural experiment based on the new asset management regulation

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  • Xuan, Siyuan
  • Song, Daqiang
  • You, Guomin

Abstract

In the context of economic globalization in the 21st century, financial risk prevention and corporate green innovation development have emerged as two indispensable themes in global economic growth. This paper selects Chinese A-share listed companies from 2010 to 2021 as a research sample and uses the introduction of the New Asset Management Regulation as a quasi-natural experiment. Employing a generalized difference-in-differences model, this paper identifies the causal relationship between financial risk prevention and corporate green innovation and assesses the policy effects of financial risk prevention. The results show that financial risk prevention significantly enhances the green innovation activities of companies with a high degree of financialization by constraining investments in financial assets and mitigating management's myopic tendencies. Heterogeneity tests reveal that the promotion effect is primarily evident in the service sector, regulated industries, state-owned enterprises, and regions with a higher level of shadow banking development. The findings reveal the value of financial risk prevention at the micro-level of corporate green innovation and provide useful policy implications for guiding finance to effectively serve the real economy.

Suggested Citation

  • Xuan, Siyuan & Song, Daqiang & You, Guomin, 2024. "Financial risk prevention and corporate green innovation: A quasi-natural experiment based on the new asset management regulation," Pacific-Basin Finance Journal, Elsevier, vol. 88(C).
    • Handle: RePEc:eee:pacfin:v:88:y:2024:i:c:s0927538x24003184
    DOI: 10.1016/j.pacfin.2024.102566
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    More about this item

    Keywords

    Financial risk prevention; Green innovation; The new asset management regulation; Financialization;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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