GREEN FINANCE, INSTITUTIONAL EMBEDDEDNESS AND TECHNOLOGICAL INNOVATION: EVIDENCE FROM CHINA’S NEW ENERGY ENTERPRISES

This study investigates how green finance affects innovation in new energy enterprises amid China’s institutional shift toward high-quality development. By exploiting a quasi-natural experiment of the 2017 Green Finance Reform and Innovation Pilot Zones and adopting the difference-in-differences method, we find that green finance reform has significantly promoted simultaneous improvement in the quantity and quality of green innovation in new energy enterprises. We validated this core finding through a series of robustness tests. The mechanism analysis shows that the expansion and accessibility of long-term debt financing constitute a core transmission channel. Additionally, the policy strengthens its incentive effect on green innovation by increasing the proportion of R&D personnel and enhancing green innovation efficiency. The heterogeneity analysis indicates that the policy effect is more pronounced in regions with a higher level of financial development, private enterprises and enterprises whose senior management teams lack an economic background. These findings highlight the socially embedded nature and heterogeneous effects of green finance and provide insights into China’s green transformation and the underlying structural dynamics that shape policy outcomes.