Does green financing promote outward FDI in enterprises? Evidence from China

In the context of sustainable development, green rules and standards have been incorporated into the international investment system. The specific advantages driving outward foreign direct investment (OFDI) by emerging market enterprises have also undergone profound changes. Green financing plays an important role in promoting green transformation and may become a new type of competitive advantage driving OFDI by firms. Based on legitimacy theory, we explore the impact of green financing on OFDI by emerging market firms. Using data from Chinese A-share listed companies from 2008 to 2021, we find that green financing significantly promotes corporate OFDI. Improving ESG levels, alleviating financing constraints and expanding production scale are the main channels. The positive effects of green financing on OFDI are more pronounced in heavily polluting industries, capital-intensive enterprises and state-owned enterprises. This study confirms the positive impact of green financing on OFDI earlier, and also provides useful inspiration and reference for emerging market countries to improve the green financial system and actively promote global green and sustainable development.