Does green finance regulation improve renewable energy utilization? Evidence from energy consumption efficiency

Green finance aims to balance economic growth, environmental conservation, and sustainable development. Exploiting the green finance reform and innovation pilot zone policy in China, this study aims to examine the impact of green finance regulation on renewable energy utilization at the firm level. Adopting energy consumption efficiency as a measure of renewable energy utilization, the difference-in-difference estimation results show that, firms' renewable energy utility in the pilot regions is enhanced by the regulation and this result is robust after several tests. The financing constraints and the corporate digitalization are the economic channels by which the green finance policy stimulates corporate renewable energy utility. In addition, this simulation impact is more prominent in small firms, young firms, and firms with weak governance corporations. In general, our study offers new evidence of advantages of green finance regulation.