Greening firms through Finance: How green finance drives corporate pollution and carbon reduction synergy in China

The dual carbon targets have rendered the coordinated reduction of pollution and carbon emissions a critical challenge for high-quality green development, however, the impact of green finance on this synergistic environmental performance has not been fully evaluated. Utilizing firm-level data from Shanghai and Shenzhen A-share listed companies between 2011 and 2022, we constructed a multidimensional green finance development index and employed fixed-effects models alongside mediation and moderation frameworks to analyze the direct effects and boundary conditions. Empirical results demonstrate that green finance significantly drives the synergistic mitigation of firms pollution and carbon intensity. Mechanism analysis reveals that green finance functions through three distinct channels: alleviating financing constraints, reducing operational management costs, and stimulating green technological innovation. Furthermore, the efficacy of green finance is positively moderated by the intensities of both environmental and financial regulations, and these benefits are more pronounced in state-owned enterprises, manufacturing sectors, large corporations, and firms with sound governance structures. This study enriches the micro-level understanding of green finance by identifying its dual roles of resource empowerment and institutional constraints, and thereby suggests that policymakers should integrate market-based instruments with government regulations and design differentiated green financial products to maximize the synergistic governance of pollution and carbon reduction.