Impact of Green Credit and Financial Regulation on Corporate Green Innovation in India

Nenavath Sreenu

Economic Notes, 2026, vol. 55, issue 2

Abstract: In India's quest for sustainable development, the interplay among corporate green innovation, financial regulation, and green financing has gained increasing importance. Although existing literature emphasizes the critical role of green finance in promoting environmentally sustainable innovations, there is a notable gap in studies that examine the combined effects of green credit and financial regulation at the firm level. This study aims to bridge this gap by analyzing annual data from publicly traded Indian corporations over the period from 2012 to 2024. To explore these dynamics, we utilize a robust regression model that assesses the impact of green credit (GC) on corporate green innovation (CGI). Our analysis reveals that green finance plays a significant role in stimulating corporate green innovation, with financial regulation serving to further amplify this positive effect. Importantly, the impact of green finance is particularly pronounced among larger firms, underscoring its potential to catalyze sustainable transformation across all sectors of business in India.

Date: 2026
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