The Impact of Green Finance on Corporate Financing Costs

Yuhan Hu ()
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Yuhan Hu: Beijing Institute of Technology, School of Management

A chapter in Proceedings of the 2025 International Conference on Financial Innovation and Marketing Management (FIMM 2025), 2025, pp 349-357 from Springer

Abstract: Abstract Green finance has developed rapidly due to the Paris Agreement and people’s growing concern for environmental protection and green development, exerting a profound impact on corporate financing. This study focuses on how green finance affects corporate financing costs and its specific mechanisms. Through a literature review and case comparison analysis, it reveals three core mechanisms. First, risk mitigation mechanism: green financial tools reduce environmental and social risks, improve credit ratings, and lower risk premiums. Next, policy incentive mechanism: the government directly reduces the capital cost of green projects through subsidies, tax incentives, and regulatory preferences. Last, market-driven mechanism: investors’ preference for ESG-compliant assets creates a green premium, lowering the yield of green bonds and broadening financing channels. The study highlights the substantive benefits of green finance through case analysis and comparison, providing key evidence for governments to improve the green finance system and for enterprises to optimize their sustainable transformation financing strategies.

Keywords: Green Finance; Corporate Financing Cost; Sustainable Development (search for similar items in EconPapers)
Date: 2025
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DOI: 10.2991/978-94-6463-874-5_43

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