Venture Capital, Environmental Regulation and Regional Green Innovation: Evidence from China

Venture capital can promote green innovation by providing financial support for green innovation activities. Based on panel data from 30 provincial-level administrative regions in China, this research analyzes the impact of venture capital on green innovation and its underlying mechanisms. The results show that venture capital significantly promotes regional green innovation. Through the mediation analysis, it is found that venture capital primarily promote green innovation by increasing R&D investment and improving the level of research team level. The increase in R&D investment is the main pathway through which venture capital influences the level of green innovation, as firms receiving venture capital are more willing to allocate these funds towards green innovation activities. The study also finds that the impact of venture capital on green innovation is influenced by environmental regulation, with an upper limit to the intensity of environmental regulation. Environmental regulation below this limit value amplifies the positive effect of venture capital on green innovation, while regulation exceeding this threshold reduces the effect of venture capital on green innovation. The article confirms the important role of venture capital in promoting green innovation, enriches the research on the innovation effects of venture capital, and provides theoretical references for green development.