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How does green finance overcome the bottleneck of green productivity? Moderating effects of green transformation

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  • Zhefan Piao

    (Zhejiang University of Finance and Economics)

  • Xie Chen

    (Zhejiang University of Finance and Economics
    Zhejiang University of Finance and Economics Dongfang College)

  • Yang Li

    (Zhejiang University of Finance and Economics)

  • Kun Yang

    (Xi’an Jiaotong University)

Abstract

The development of green finance is crucial for China’s economic and long-term environmental sustainability. This study examines the impact of government-led green finance on green total factor productivity (GTFP) at the enterprise level in China’s polluting and environmental protection industries from 2005 to 2022. It explores how green transformation moderates this relationship and examines, in particular, the potential heterogeneity and industry spillover effects from green bond issuance. Our findings reveal that in polluting industries, there is an inverted U-shaped relationship between green finance and GTFP. In contrast, this relationship is not significant in environmental protection industries. Green transformation positively mitigates the inverted U-shaped relationship. Further analysis reveals that, first, the relationship between green finance and GTFP is insignificant for enterprises with insufficient green behavior. Second, green transformation can exert a moderating effect by alleviating financing constraints. Additionally, companies that issue green bonds increase their GTFP and generate industry spillover effects by encouraging other firms to undertake green transformations. This study provides novel insights and empirical evidence for guiding green finance development and promoting sustainable green development.

Suggested Citation

  • Zhefan Piao & Xie Chen & Yang Li & Kun Yang, 2025. "How does green finance overcome the bottleneck of green productivity? Moderating effects of green transformation," Economic Change and Restructuring, Springer, vol. 58(1), pages 1-40, February.
    • Handle: RePEc:kap:ecopln:v:58:y:2025:i:1:d:10.1007_s10644-024-09852-1
    DOI: 10.1007/s10644-024-09852-1
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    Cited by:

    1. Xiekui Zhang & Zhusheng Wu & Zefeng Zhang, 2025. "Can Functional Industrial Policy Promote Digital–Green Synergy Development?," Sustainability, MDPI, vol. 17(16), pages 1-36, August.

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    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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