The impact of local green finance policies on corporate green innovation from the perspective of policy embeddedness: evidence from Chinese A-listed companies

Abstract From the perspective of policy embeddedness, this paper explores the effect of local green financial support policies (LGFP) on the green transformation (GT) of enterprises in China. We constructed a novel database covering 278 prefectures to analyze the impact of LGFP on firms' GT, proposing three theoretical mechanisms: alleviating corporate financing constraints, reducing information asymmetry, and enhancing financial technology (FinTech). The empirical results indicate that LGFP significantly promotes green technological innovation (GTI), particularly among heavy-polluting industries, state-owned enterprises (SOEs), and firms in regions with stringent environmental regulations (ER) and lower marketization levels. Mechanistic analysis reveals that LGFP facilitates GTI by easing financing constraints and mitigating information asymmetry. Additionally, FinTech amplifies the positive impact of LGFP on GTI. This paper enriches the application of policy embeddedness theory in the context of green finance and environmental management, offering practical insights for policymakers and firms pursuing sustainable development.