What is it about?

Adopting a sample of China’s listed companies from 2012 to 2021, this paper constructed a quasi-natural experiment and investigated the GFRI policy’s effect on firms’ total factor productivity (TFP) using the difference-in-differences (DID) method to verify the implementation effect of the GFRI policy. The empirical results demonstrated that firms’ TFP in pilot zones increased substantially after implementing the GFRI pilot policy, confirming that the policy had a strong incentive effect. This paper’s empirical findings are essential in improving relevant policies and expanding the pilot zones.

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Why is it important?

The existing studies have paid much attention to investigating the effect of green credit but have ignored the role of green finance in firms’ TFP. While to the best of this study’s knowledge, this paper has provided the first evidence to demonstrate the promoting effect of the pilot policy for GFRI on firms’ TFP stimulation by adopting a quasi-natural experiment. This research may lay the empirical foundations to support further analysis. Second, in the heterogeneity analysis, this study not only captured heterogeneity effects based on firms’ attributes (i.e., SOEs and non-SOEs) and regional levels (i.e., eastern, central, and western regions), but also considered firms’ different growth paths (i.e., growth type, mature type, and declining types). Thus this study has provided an integrated scenario. Third, enlightened by the Porter Hypothesis, green finance as a useful environmental regulation instrument could encourage firms to invest more in innovation activities.


Writing this article was a great pleasure as it has co-authors with Miaomiao Tao I have had long standing collaborations. The findings of this article also indicated that implementing China’s green finance pilot policy significantly improved firms’ TFP which was essential in improving relevant policies and expanding the pilot zones.

University of Malaya

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This page is a summary of: The policy effect of green finance reform and innovations: Empirical evidence at the firm level, PLoS ONE, December 2022, PLOS,
DOI: 10.1371/journal.pone.0278128.
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