Green credit, carbon emission trading and corporate green innovation: Evidence from China

Green Credit Guidelines (GCG) and Notice of the Pilot Project on Carbon Emission Trading (CET) have the dual attributes of financial and environmental policies. They can exert an important impact on firms' innovation by influencing investment, financing, and environmental constraints. Accurately detecting their firm and synergistic effects on green innovation is vital to developing new quality productivity and promoting China's green transition. Based on China's A-listed company data from 2007 to 2020, this study use multistage dynamic difference-in-differences (DID) models to carry out a multidimensional, empirical investigation of the dual policies' impacts on green innovation. The findings, displayed as both GCG and CET, have promoting effects on green innovation, and their positive synergistic effects appear to be greater than the direct effects. In terms of dynamic effects, the dual policies promotion effect on green innovation decreases after five years of policies' simultaneous implementation. Mechanism analysis shows that the positive synergistic effects of GCG and CET on green innovation are mainly caused by alleviating financing constraints, they are moderated by company executives' academic background and external media's attention. The heterogeneity analysis shows that the promotion effects are more pronounced in the eastern region, state-owned enterprises, and mature enterprises. Some suggestions for policy optimization and implementation are proposed from the perspectives of both local government and firms.