Free Trade Zones, Green Finance Policies, and Corporate Green Transition: Evidence from Chinese A-Share Listed Companies

Against the backdrop of ongoing global green transition and trade liberalization, there remains a lack of sufficient micro-level evidence to determine whether institutional openness can improve corporate environmental performance and long-term sustainable development through the development of green finance. Based on data from Chinese A-share listed companies from 2013 to 2024, this paper utilizes the quasi-natural experiment created by the phased establishment of pilot free trade zones and employs a multi-period difference-in-differences model to examine their impact on corporate green transition and the transmission mechanism of green finance policies. The study found that the establishment of pilot free trade zones has significantly promoted the green transformation of enterprises. An analysis of intermediary effects suggests that green finance policy support may constitute a potential transmission channel; however, since its indicators primarily reflect the intensity of policy activities, they cannot yet directly identify the role of actual financing flows. Further analysis of transmission mechanisms reveals that alleviating enterprises’ financing constraints and attracting long-term institutional investors are key channels for promoting corporate green transition. Additionally, an analysis of spatial effects indicates that the development of pilot free trade zones not only benefits the green transition of enterprises in pilot cities but may also generate positive spillover effects on neighboring cities through cross-regional linkages. This paper reveals the environmental benefits of trade liberalization policies and their financial transmission mechanisms, expands research on the relationship between institutional openness and corporate green behavior, and provides policy insights for emerging economies seeking to balance economic openness, environmental protection, and sustainable development goals. However, as the study sample primarily consists of Chinese listed companies, the cross-national applicability of the findings requires further verification.