Financialization, Heterogeneous Environmental Regulation, and Corporate Green Innovation: Evidence from China

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.