The Impact of Green Finance Pilot Cities on Enterprises’ Green Innovation Performance: An Empirical Study in China

Shanqing Liu, Jiacheng Qian, Huwei Wen and Ying Wang ()
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Shanqing Liu: Institute for the Revitalization of the Soviet District, Jiangxi Normal University, Nanchang 330022, China
Jiacheng Qian: Business School, Jiangxi Normal University, Nanchang 330022, China
Huwei Wen: School of Economics & Management, Nanchang University, Nanchang 330047, China
Ying Wang: School of Management, Universiti Sains Malaysia, George Town 11800, Malaysia

Sustainability, 2025, vol. 17, issue 3, 1-21

Abstract: Effectively leveraging green finance policies is essential to promoting urban green technology innovation, achieving sustainable development, and addressing global environmental challenges. This paper investigates the impact of the Green Finance Pilot City Policy (GFPP) on corporate green innovation performance by analyzing data from China’s A-share listed companies from 2012 to 2022. Using a difference-in-differences methodology, mediation effect analysis, and panel data techniques, the findings reveal that the GFPP significantly enhances corporate green innovation performance, with particularly strong effects in designated pilot zones compared to other cities. Key mechanisms identified include reductions in financing and agency costs, which facilitate innovation. Furthermore, the impact of the GFPP is heterogeneous, varying by region, the nature of firms’ property rights, and specific industry characteristics. The promotional effect of the GFPP on firms’ green innovation performance will, to some extent, also contribute to green sustainable development in the wider environment within the region, and the feasibility of the pilot policy will also drive the promotion and development of the policy on a wider scale in China.

Keywords: green innovation performance; financing cost; agency cost; green finance policies; sustainable development (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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