Green finance and firms' pollution emissions: Evidence from Chinese listed firms

Bin Pan; Jiqiang Huang; Supu Xie; Bin Pan; Jiqiang Huang; Supu Xie

doi:10.3934/QFE.2026004

Quantitative Finance and Economics

2026, Volume 10, Issue 1: 63-85. doi: 10.3934/QFE.2026004

Previous Article Next Article

Research article

Green finance and firms' pollution emissions: Evidence from Chinese listed firms

1.
School of Accounting, Guangzhou College of Commerce, Guangzhou 511363, China
2.
School of Business, Xiangtan University, Xiangtan 411105, China
3.
School of Accounting, Hunan University of Finance and Economics, Changsha 410205, China

Received: 31 July 2025 Revised: 31 October 2025 Accepted: 21 November 2025 Published: 16 January 2026
JEL Codes: Q58, Q52, G28, O31

Green finance is a key policy tool for sustainable development. The establishment of Green Finance Reform and Innovation Pilot Zones (GFRIPZs) has become an important driver of green growth. In this study, we used data on A-share listed firms from 2012 through 2023 and treated the 2017 launch of the first GFRIPZs as a quasi-natural experiment. We estimated a difference-in-differences (DID) model to measure the effect of green finance on firm-level pollution emissions. The results showed that GFRIPZs significantly reduce pollution emissions among listed firms. These findings hold after several robustness checks. Further analysis showed that the reduction mainly comes from green innovation, especially end-of-pipe treatment technologies. In contrast, source-control technologies show no clear effect. Heterogeneity tests show stronger effects for state-owned firms, large firms, financially constrained firms, firms facing stricter environmental regulation, and firms with greater government attention. Overall, the evidence indicated that green finance reduces pollution and offers policy guidance for China's green transition.
- green finance,
- pollution emissions,
- green innovation,
- governance path,
- China
Citation: Bin Pan, Jiqiang Huang, Supu Xie. Green finance and firms' pollution emissions: Evidence from Chinese listed firms[J]. Quantitative Finance and Economics, 2026, 10(1): 63-85. doi: 10.3934/QFE.2026004

Related Papers:

Abstract

Green finance is a key policy tool for sustainable development. The establishment of Green Finance Reform and Innovation Pilot Zones (GFRIPZs) has become an important driver of green growth. In this study, we used data on A-share listed firms from 2012 through 2023 and treated the 2017 launch of the first GFRIPZs as a quasi-natural experiment. We estimated a difference-in-differences (DID) model to measure the effect of green finance on firm-level pollution emissions. The results showed that GFRIPZs significantly reduce pollution emissions among listed firms. These findings hold after several robustness checks. Further analysis showed that the reduction mainly comes from green innovation, especially end-of-pipe treatment technologies. In contrast, source-control technologies show no clear effect. Heterogeneity tests show stronger effects for state-owned firms, large firms, financially constrained firms, firms facing stricter environmental regulation, and firms with greater government attention. Overall, the evidence indicated that green finance reduces pollution and offers policy guidance for China's green transition.

References

[1]	Bhatnagar S, Sharma D, Singh VV (2025) Green finance and investment in India: Unveiling enablers and barriers for a sustainable future. J Clean Prod 493: 144908. https://doi.org/10.1016/j.jclepro.2025.144908 doi: 10.1016/j.jclepro.2025.144908
[2]	Calvia M (2024) Fossil energy use and carbon emissions: An easy-to-implement technical policy experiment. Green Financ 6: 407–429. https://doi.org/10.3934/GF.2024016 doi: 10.3934/GF.2024016
[3]	Cheng JM, Jiang YM (2024) How can carbon markets drive the development of renewable energy sector? Empirical evidence from China. Data Sci Financ Econ 4: 249–269. https://doi.org/10.3934/DSFE.2024010 doi: 10.3934/DSFE.2024010
[4]	Fan L, Peng BB, Lin ZG, et al. (2024) The effects of green finance on pollution and carbon reduction: Evidence from China's industrial firms. Int Rev Econ Financ 95: 103490. https://doi.org/10.1016/j.iref.2024.103490 doi: 10.1016/j.iref.2024.103490
[5]	Fan M, Liu WX, Yao D (2025) The impact of green finance reform and innovation pilot zones on corporate pollution and carbon reduction: From the perspective of dual objective constraints. J Environ Manage 389: 126110. https://doi.org/10.1016/j.jenvman.2025.126110 doi: 10.1016/j.jenvman.2025.126110
[6]	Gao YZ, Gao HY, Yu YJ, et al. (2025) Green finance reform and enterprise green technology innovation—based on the perspective of spatial spillover effect. Int Rev Econ Financ 101: 104247. https://doi.org/10.1016/j.iref.2025.104247 doi: 10.1016/j.iref.2025.104247
[7]	Hadlock C, Pierce J (2010) New Evidence on Measuring Financial Constraints: Moving Beyond the KZ Index. Rev Financ Stud 23: 1909–1940. https://doi.org/10.1093/rfs/hhq009 doi: 10.1093/rfs/hhq009
[8]	Han LZ, Li JW (2025) Does green finance reform promote corporate carbon emission reduction? Evidence from China's green finance reform and innovation pilot zones. Econ Anal Policy 85: 2091–2111. https://doi.org/10.1016/j.eap.2025.03.005 doi: 10.1016/j.eap.2025.03.005
[9]	He NC, Zeng SB, Jin G (2023) Achieving synergy between carbon mitigation and pollution reduction: Does green finance matter? J Environ Manage 342: 118356. https://doi.org/10.1016/j.jenvman.2023.118356 doi: 10.1016/j.jenvman.2023.118356
[10]	Hou MY, Xie YL, Lu WN, et al (2025). Green finance drives the synergy of pollution control and carbon reduction in China: Dual perspective of effect and efficiency. Energy 330: 136873. https://doi.org/10.1016/j.energy.2025.136873 doi: 10.1016/j.energy.2025.136873
[11]	Hu S, Chen P L, Zhang CL (2025) How does green finance reform affect corporate ESG greenwashing behavior? Int Rev Financ Anal 102: 104037. https://doi.org/10.1016/j.irfa.2025.104037 doi: 10.1016/j.irfa.2025.104037
[12]	Hu WQ, Fang JW (2025) Green credit and firms' emission reduction performance: Evidence from China. World Dev 194: 107075. https://doi.org/10.1016/j.worlddev.2025.107075 doi: 10.1016/j.worlddev.2025.107075
[13]	Huang JQ, Zheng KC, Han CH (2023) Green finance and enterprise green innovation: incentive effect and synergy perspective. Environ Dev Sustain 26: 28107–28129. https://doi.org/10.1007/s10668-023-03803-y. doi: 10.1007/s10668-023-03803-y
[14]	Hunjra AI (2025) The green intentions of capital: How green finance is changing the boundaries of corporate sustainability strategies. J Environ Manage 390: 126362. https://doi.org/10.1016/j.jenvman.2025.126362 doi: 10.1016/j.jenvman.2025.126362
[15]	Jiang J, Zhang M (2020) Friends with Benefits: Patronage Networks and Distributive Politics in China. J Public Econ 184: 104143. https://doi.org/10.1016/j.jpubeco.2020.104143 doi: 10.1016/j.jpubeco.2020.104143
[16]	Jiang MY, Ma J (2025) Policy, investment, and growth: How green finance drives corporate sustainable development? Int Rev Econ Financ 102: 104326. https://doi.org/10.1016/j.iref.2025.104326 doi: 10.1016/j.iref.2025.104326
[17]	Kung CC, Chang MS (2025) The efficient investment strategy of bioenergy under climate change and green finance policies. Int J Hydrog Energ 109: 905–917. https://doi.org/10.1016/j.ijhydene.2025.02.168 doi: 10.1016/j.ijhydene.2025.02.168
[18]	Li JJ, Sun RK (2024) How tax incentives impact corporate green transformation: Evidence from China's tax survey data. J Clean Prod 521: 146279. https://doi.org/10.1016/j.jclepro.2025.146279 doi: 10.1016/j.jclepro.2025.146279
[19]	Li SY, Chen ZH, Diao Y, et al. (2025) The impact of green finance on debt financing costs from the perspective of strategic corporate signaling behavior—Evidence from China. Int Rev Financ Anal 10: 104024. https://doi.org/10.1016/j.irfa.2025.104024 doi: 10.1016/j.irfa.2025.104024
[20]	Li YT, Xu YM (2024) Impact of green finance on China's pollution reduction and carbon efficiency: Based on the spatial panel model. Int Rev Econ Financ 94: 103382. https://doi.org/10.1016/j.iref.2024.103382 doi: 10.1016/j.iref.2024.103382
[21]	Li Z, Huang Z, Su Y (2023) New media environment, environmental regulation and corporate green technology innovation: Evidence from China. Energ Econ 119: 106545. https://doi.org/10.1016/j.eneco.2023.106545 doi: 10.1016/j.eneco.2023.106545
[22]	Li ZX, Xue R, Yong F, et al. (2025) Does green credit regulation induce managerial opportunistic behavior in heavily polluting enterprises? A quasi-natural experiment from China. Int Rev Econ Financ 103: 104520. https://doi.org/10.1016/j.iref.2025.104520 doi: 10.1016/j.iref.2025.104520
[23]	Liu MT, Fang XB (2024) Does green financing promote outward FDI in enterprises? Evidence from China. J Environ Manage 370: 122991. https://doi.org/10.1016/j.jenvman.2024.122991 doi: 10.1016/j.jenvman.2024.122991
[24]	Liu S, Wang YK (2023) Green innovation effect of pilot zones for green finance reform: Evidence of quasi natural experiment. Technol Forecast Soc Chang 186: 122079. https://doi.org/10.1016/j.techfore.2022.122079 doi: 10.1016/j.techfore.2022.122079
[25]	Lu HX, Pan Y, Fang RJ, et al. (2025) Green credit policy and heavily polluting enterprises' green transition. Int Rev Financ Anal 103: 104162. https://doi.org/10.1016/j.irfa.2025.104162 doi: 10.1016/j.irfa.2025.104162
[26]	Qi Y, Zhang JS, Chen JW (2023) Tax incentives, environmental regulation and firms' emission reduction strategies: Evidence from China. J Environ Econ Manage 117: 102750. https://doi.org/10.1016/j.jeem.2022.102750 doi: 10.1016/j.jeem.2022.102750
[27]	Ruan L, Yang LW, Li DNM (2025) The impact of green finance policies on supply chain resilience. Econ Anal Policy 87: 18–37. https://doi.org/10.1016/j.eap.2025.05.060 doi: 10.1016/j.eap.2025.05.060
[28]	Wang Y (2025) Greenwashing or green evolution: Can transition finance empower green innovation in carbon-intensive enterprise? Int Rev Financ Anal 97: 103826. https://doi.org/10.1016/j.irfa.2024.103826 doi: 10.1016/j.irfa.2024.103826
[29]	Xu AT, Dai YJ, Hu ZY, et al. (2025) Can green finance policy promote inclusive green growth?- Based on the quasi-natural experiment of China's green finance reform and innovation pilot zone. Int Rev Econ Financ 100: 104090. https://doi.org/10.1016/j.iref.2025.104090 doi: 10.1016/j.iref.2025.104090
[30]	Yang JH, Wang S, Xu L (2025) Green finance innovation and corporate resilience: Evidence from China's reform zones. Financ Res Lett 81: 107488. https://doi.org/10.1016/j.frl.2025.107488 doi: 10.1016/j.frl.2025.107488
[31]	Yu HW, Liao LQ, Qu SY et al. (2021) Environmental regulation and corporate tax avoidance: A quasi-natural experiments study based on China's new environmental protection law. J Environ Manage 296: 113160. https://doi.org/10.1016/j.jenvman.2021.113160 doi: 10.1016/j.jenvman.2021.113160
[32]	Zhang G, Guo BN (2025) The Impact of green finance reform on firms' patent quality: An empirical study from Chinese listed manufacturing firms. Econ Anal Policy 86: 1695–1705. https://doi.org/10.1016/j.eap.2025.05.015 doi: 10.1016/j.eap.2025.05.015
[33]	Zhang GX, Wang YT, Zhang ZH, et al. (2024) Can green finance policy promote green innovation in cities? Evidence from pilot zones for green finance reform and innovation in China. J Environ Manage 370: 122816. https://doi.org/10.1016/j.jenvman.2024.122816 doi: 10.1016/j.jenvman.2024.122816
[34]	Zhang T (2023) Can green finance policies affect corporate financing? Evidence from China's green finance innovation and reform pilot zones. J Clean Prod 419: 138289. https://doi.org/10.1016/j.jclepro.2023.138289 doi: 10.1016/j.jclepro.2023.138289
[35]	Zhang YJ, Bawuerjiang R, Lu MT, et al. (2024) Green finance and environmental pollution: Evidence from China. Econ Anal Policy 84: 98–110. https://doi.org/10.1016/j.eap.2024.08.022 doi: 10.1016/j.eap.2024.08.022
[36]	Zhang ZH, Deng HW, Yan MX, et al. (2025) The collaborative effect of green finance policy on pollution and carbon reduction: A quasi-experimental design. Int Rev Econ Financ 102: 104265. https://doi.org/10.1016/j.iref.2025.104265 doi: 10.1016/j.iref.2025.104265
[37]	Zhong S, Zhou ZC, Gao W (2025) Impact of regional finance reform and innovation policies on green innovation in pilot cities: A quasi-natural experiment. Econ Anal Policy 85: 888–911. https://doi.org/10.1016/j.eap.2025.01.005 doi: 10.1016/j.eap.2025.01.005
[38]	Zhu CL, Qi JJ, Feng LB, et al. (2025) Source control or end-of-pipe treatment: How green finance policy impacts enterprise carbon intensity. Int Rev Financ Anal 104: 104323. https://doi.org/10.1016/j.irfa.2025.104323 doi: 10.1016/j.irfa.2025.104323

Reader Comments

Your name:*

Email:*
© 2026 the Author(s), licensee AIMS Press. This is an open access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0)