Can green financial pilot policy reduce firms’ carbon emissions? Evidence from Chinese manufacturing firms

Di Zhou, Guo Chen and Dongchun Xie ()
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Di Zhou: Guangdong University of Foreign Studies
Guo Chen: Guangdong University of Foreign Studies
Dongchun Xie: Shantou Polytechnic

Economic Change and Restructuring, 2025, vol. 58, issue 1, No 16, 30 pages

Abstract: Abstract Green development is closely tied to the allocation of economic and financial instruments for resource management. Green finance plays an important role in limiting excessive pollution across various industries. To assess the impact of China’s green finance pilot program (GFPP) on the carbon emissions of manufacturing firms, we treat the implementation of the GFPP as a quasi-natural experiment and find an important evidence that the GFPP reduces firms’ carbon emissions in pilot zones. Moreover, the GFPP promotes firms’ green innovation by easing financial constraints. The policy also enhances public oversight, thereby further reducing firms’ carbon emissions. However, firms’ greenwashing behavior is predicted to weaken the emission-reduction effect of the GFPP. This work provides a basis for carbon emission reductions through green finance in developing countries.

Keywords: Green finance; Firms’ carbon emissions; Greenwashing; Difference-in-differences; Quasi-natural experiment (search for similar items in EconPapers)
JEL-codes: G20 O1 O13 Q50 Q53 Q56 Q58 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10644-024-09850-3

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