Shujie Xing, zhaoyong chen
As an institutional arrangement integrating environmental goals into resource allocation, green finance plays a crucial role in firms’ innovation strategies. Using panel data on Chinese A-share listed firms from 2009 to 2022, this study employs a two-way fixed effects model to examine the impact of green finance on digital technological innovation and its underlying mechanisms. The results show that green finance significantly promotes firms’ digital technological innovation, and this finding remains robust across instrumental variable estimation, placebo tests, propensity score matching, and alternative sample specifications. A mediation analysis further reveals that green finance promotes digital innovation through three channels: alleviating financing constraints, enhancing risk-taking capacity, and improving data factor utilization. The effect is stronger in regions with strong Confucian culture, highly competitive and heavily polluting industries, and central and eastern regions with stricter environmental regulation. Furthermore, by fostering digital innovation, green finance improves firm productivity and ESG performance. These findings provide micro-level evidence on how green finance empowers corporate innovation in China and extend the literature on green finance and digital transformation.