ORIGINAL RESEARCH
Financialization, Heterogeneous Environmental
Regulation, and Corporate Green Innovation:
Evidence from China
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1
School of Economics and Management, Civil Aviation University of China, Tianjin 300300, China
2
International Engineering and Technology Institute, Hong Kong, China
Submission date: 2023-10-20
Final revision date: 2023-11-06
Acceptance date: 2023-11-15
Online publication date: 2024-02-08
Publication date: 2024-03-18
Corresponding author
Di Ke
School of Economics and Management, Civil Aviation University of China, Tianjin 300300, China
Pol. J. Environ. Stud. 2024;33(3):2739-2760
KEYWORDS
TOPICS
ABSTRACT
Along with the promotion of China’s green development strategy and the policy of financial services
to the real economy, how financialization affects corporate green innovation becomes an urgent issue
to be explored. Using Chinese A-share listed enterprises from 2007 to 2020, this study empirically
analyzes the impact of financialization on corporate green innovation and its underlying mechanism,
and the moderating effect of heterogeneous environmental regulation is examined. Results show that
financialization significantly inhibits corporate green innovation, and the command-and-control
environmental regulation is more effective in weakening the inhibiting effect of financialization on
corporate green innovation than market-incentivized and public-participation environmental regulation.
Moreover, mechanism analyses show that financialization inhibits corporate green innovation mainly by
affecting innovation input and financing constraints. Extended analyses show that the inhibiting effects
of financialization on strategic and substantive green innovation of enterprises are not significantly
different, but the inhibiting effect of financialization on independent green innovation is significantly
higher than that on joint green innovation. In addition, the inhibiting effect of financialization on green
innovation is more significant in non-heavy polluting industries and regions with high regulatory
pressure. This study reveals the negative effects of financialization on corporate green innovation
from a micro-finance perspective, which not only helps to improve the internal investment decisionmaking
mechanism of companies and the regulatory system of corporate financialization, but also
has some insights to guide the practice of green innovation of real enterprises and promote the green
transformation of economic development mode.