Do Green Financial Policies Enhance Firms’ TFP? Evidence from China’s Green Finance Pilot Zones

Green finance is an important policy for facilitating corporate environmental transformation and supporting sustainable economic development under China’s “dual-carbon” strategy. This study investigates how green financial policies influence a firm’s TFP. A DID framework is employed to estimate the policy effect and to further explore its transmission mechanisms and heterogeneous impacts across firms, applying the data of China’s A-share-listed companies from 2013 to 2024. It is found that green financial policies significantly improve a firm’s TFP. Specifically, firms located in pilot regions exhibit an average increase of 0.4509 in TFP. The results remain stable across multiple robustness checks. In addition, the policy improves TFP through three primary channels: alleviating financing constraints, stimulating green technological innovation, and promoting digital transformation. The mediation analysis based on Bootstrap resampling confirms the statistical significance of the identified transmission channels. Among them, digital transformation plays the most prominent role, contributing 20.62% to the overall mediating effect. Furthermore, the policy can enhance the TFP of non-state-owned enterprises and for firms operating in industries with lower pollution intensity. Finally, this study proposes further improving the green financial policy framework and strengthening support for green technological innovation and digital transformation, thereby better leveraging green finance to enhance firms’ TFP.