“Crowding Out” or “Reservoir Effect”? Unraveling the Impact of Financialization on Green Innovation in Heavy Polluting Enterprises: Evidence from China’s Listed Companies

Zifeng Zhong and Kunming Li ()
Additional contact information
Zifeng Zhong: College of Economics and Management, Fujian Agriculture and Forestry University, Fuzhou 350002, China
Kunming Li: College of Economics and Management, Fujian Agriculture and Forestry University, Fuzhou 350002, China

Sustainability, 2024, vol. 16, issue 16, 1-20

Abstract: In the era of green transformation and sustainable development, green innovation has become a key force driving the greenization of the economy and society, as well as achieving global sustainable development goals. This study aims to investigate the impact of financialization on green innovation in heavy polluting enterprises, a sector where enhancing green innovation capabilities is crucial for both industry transformation and sustained economic growth. As the financialization of enterprises deepens, its effects on green innovation become increasingly significant. Based on data from 667 listed companies in China, we explore the mechanisms through which financialization influences green innovation. Our findings reveal that financialization has both a potential “reservoir” effect, which provides financial support for green innovation, and a significant “crowding out” effect, with the latter outweighing the former, thereby suppressing investment in green innovation. Further analysis indicates that these effects exhibit significant heterogeneity across different property rights, regions, and corporate debt-to-asset ratios. Additionally, the short-term debt-paying ability of enterprises and market competitiveness play important regulatory and threshold roles in this relationship. This study not only provides a new perspective for understanding the relationship between the financialization of heavy polluting enterprises and green innovation but also offers valuable insights for promoting the coordinated development of both and addressing the challenges of green innovation.

Keywords: financialization of polluting enterprises; green innovation; “crowding out” effect; market competition (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2071-1050/16/16/7192/pdf (application/pdf)
https://www.mdpi.com/2071-1050/16/16/7192/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:16:y:2024:i:16:p:7192-:d:1461043

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().