Can Green Financial Reform Policies Promote Enterprise Development? Empirical Evidence from China

Abstract

Green finance is considered a viable way to promote sustainable economic development and can effectively enhance enterprise development by alleviating financing constraints and eliminating liquidity risk. The Chinese government has formulated many policies to promote sustainable and enterprise development, including the green financial reform policy, but the implementation of the green financial reform policy is still unclear. In this context, this study employs the difference in difference (DID) method to evaluate the impact of green financial reform policy on enterprise development by using the data of 33,539 Chinese enterprises from 2007 to 2021. The empirical findings indicate that the green finance pilot policy posed a significant impact on the enterprises’ development level. The green financial reform policy accelerates enterprise development by reducing enterprise financing constraints, increasing the number of government subsidies received by enterprises, and improving corporate social responsibility. In addition, the green financial policy reform has varying impacts on various types of enterprises. The results further indicate that it has promoted advancing state-owned enterprises and low-polluting enterprises’ development toward high quality. In contrast, it has not played a similar role for non-state-owned enterprises and high-pollution enterprises. Based on the results, important policy implications are suggested to promote enterprises’ sustainable and high-quality development.

1. Introduction

The Chinese economy has been developing rapidly over the last two decades. Even though COVID-19 restrictions negatively affected sustainable development around the world. China’s economic recovery rate also leads the world, and it is the only economy in the world to achieve positive economic growth [1,2]. However, to achieve rapid economic growth, China’s environmental quality has been seriously damaged [3,4,5]. To tackle this issue, China proposed the concepts of “two-oriented society” and “carbon neutrality”, which emphasize transforming the traditional development strategy into green, low-carbon, and sustainable development [6,7]. Finance is widely believed to be the backbone of economic development; pollution has also gradually intensified with the expansion of the financial industry [8]. Therefore, the emergence of green finance just conforms to the development of the times.

The 1980 Superfund Act was a starting point for the early construction of the green financial system in the United States. The bill requires banks to bear loan responsibility for the cost of corporate governance of polluted land. By 2021, the issuance of green bonds in the United States was the largest in the world; in the 1970s, due to the “Minamata disease” incident, Japan attached great importance to legislation to protect the environment. Not only that, Japan launched the four major plans of the “Japanese version of green new policy” in April 2009 to further protect the environment through financial means. As of August 2020, Japan has issued 41 policies related to green finance. By October 2021, Japan had issued a total of USD 31.68 billion in green bonds. The European Union’s green finance movement was launched by the European Investment Bank in 2007. It issued the world’s first green bond—the “climate awareness bond” to investors in 27 EU member countries, promoting the international development of green bonds and accelerating its scale expansion. By 2021, Germany’s issuance of green bonds will be the second in the world, and France’s issuance will be the fourth in the world, followed by other EU countries. Although China’s green finance started late, it developed rapidly. In 2016, the Chinese government issued guidelines on building a green financial system [9]. In 2017, in order to implement the green financial system, the Chinese government issued an overall plan for building a green financial reform and innovation pilot area [10]. In November 2019, Lanzhou New Area in Gansu Province was approved as the ninth national green finance reform and innovation pilot zone. In 2021, it succeeded in overtaking France to become the third country in the world in the issuance of green bonds [11].

High-quality development is the primary task for China to comprehensively build a modern socialist country. High-quality development can solve the current social contradictions in China, as well as the contradictions between enterprise development and the environment, and can become the backing of sustainable development and stability. Therefore, in 2017, the 19th National Congress of the CPC proposed a new expression of high-quality development for the first time. In 2021, Xi Jinping repeatedly stressed the significance of “high-quality development”. Because green finance focuses on environmental protection and conforms to the concept of sustainable development, which is in line with the concept of sustainable development, green finance begins to flourish. However, the theoretical research conclusions are not uniform, so the research on green finance is gradually increasing. At present, researchers mainly focus on the impact of green finance on the quality of regional development [12,13]. There is still a lack of relevant literature on the impact of green finance on the development quality of micro-enterprises. However, the quality of enterprise development is directly related to economic stability. Therefore, so as to promote the stable and healthy development of the economy, it is necessary to ensure that enterprises develop toward high quality. We hope to answer whether the implementation of the pilot reform of green finance policy will promote the development of enterprises to high quality through the research on the reform policy of green finance pilot and the quality of enterprise development. Additionally, if green finance really promotes the development of enterprises to high quality, what is its impact path? These two questions supplement the lack of relevant literature, and at the same time, provide our own opinions on the contradictions of previous research conclusions. At present, China’s green finance has started late, and enterprises have ambiguous attitudes toward green finance and do not know how to better use green finance as a tool to help their own development. Therefore, by evaluating the implementation results of green finance policy, taking into account the differences between different types of enterprises, we have put forward adequate and appropriate suggestions for enterprises to help different types of enterprises carry out personalized development, providing experience for the further development of green finance in various countries. Therefore, our research has certain theoretical and practical value.

Compared with previous studies, we have the following advantages: (1) We are the first to use the latest green finance reform pilot data to study its impact on advancing company development toward high quality. Compared with the pilot area of five provinces and eight cities in 2017, the pilot area of six provinces and nine regions after Lanzhou New Area of Gansu Province, the only one located in the Yellow River basin, was included in 2019, taking into account the impact of unique factors such as the less developed areas and ecologically fragile areas of the Yellow River Basin on enterprise development. At the same time, as Lanzhou New Area undertakes the strategic mission role of “an important economic growth pole in Northwest China, an important national industrial base, an important strategic platform for opening to the west, and a demonstration area for undertaking industrial transfer”, the pilot zone of six provinces and nine regions considers the impact of green finance on industrial transfer in Northwest China. The new data are, therefore, more comprehensive and representative than the old ones. (2) We took into account enterprises in different industries and enterprises with different property rights in our research, conducted targeted research, and put forward corresponding suggestions. (3) We deeply studied the impact path of green finance on advancing company development toward high quality, which has played a reference role for their future development.

The following research framework is as follows: Section 2 is the literature review; Section 3 is the research design, including the description of relevant variables and theoretical models; Section 4 is the results of the basic regression experiment and related robustness test; Section 5 is the results of further analysis, including intermediary test and heterogeneity test; and Section 6 is conclusions and recommendations, and puts forward targeted suggestions according to the previous analysis results.

2. Literature Review

At present, there are many studies on green finance, but only a single indicator is used to evaluate the level of green finance, and there is a lack of evaluation on the effectiveness of green finance reform pilots; most of the studies on enterprises focus on financial performance, so there is a lack of literature on high-quality development.

2.1. Literature on Green Finance

The establishment of green financial policy is to seek a balance in the middle of the economy and the ecological environment. It uses financial instruments such as bonds and insurance to ensure sustainable and high-quality social development [14,15]. The initial research on green finance focused on the measurement of green finance [12,16]. The later research focuses on its impact on technological progress and innovation. Fang, Y and others believe that the environmental regulations of local governments affect the effect of green finance, and the regulations of encouragement type make green finance promote innovation, while the laws and regulations of order type have a negative effect, which violates the original intention of formulating policies [17]. The research of Yang, Y. X and others also confirmed that the type of local environmental regulations had a significant influence on the effectiveness of environmental policies [18]. Liu, L considered the particularity of the e-commerce industry and believed that whether the relevant enterprises could gain benefits through green finance depended on a variety of factors, such as additional income from innovation [19]. Yang, S. L and others found that the attitude of enterprises toward green finance depended not only on themselves but also on other enterprises [20]. Jiang, Y. L and others found that the development level of corporate digital finance had an inhibitory effect on green investment by studying the development level of corporate digital finance [21]. The other part of the study focuses on its impact on the macro aspect. Huang, H. F and others analyzed the data of various provinces, and found that green finance has indeed strengthened the attention of various regions to the environment and reduced pollution emissions. In the meantime, they conducted heterogeneity analysis on different regions and found that the degree of pollution also had a significant impact on the effect of green finance [22]. Chen, X and others considered the impact of green finance from various aspects, and found that green finance had a significant impact on the carbon emissions, financing constraints, and innovation capacity of each province, and there is a spillover effect [23]. However, there is a lack of research on the effectiveness of green financial policies. Du, M reached the conclusion that the digital inclusive financial environment of enterprises affects the role of green financial policies after analyzing the data on the degree of digital inclusive finance in different regions [24]. Chai, S. L and others found that the green credit policy needs to further guide enterprises to play a better role by analyzing the data of highly polluting enterprises [25]. Zhang, M and others analyzed the data of high-carbon and low-carbon emission regions, respectively, and pointed out that the implementation of the green credit policy in high-carbon emission areas is better [26]. Zhang, S. L and others confirmed that the green credit policy had made great contributions to the environment in the east and west, but had not played its due role in the central region [27].

In addition to the research on green finance in China’s special national conditions, Ning, Y. Y and others conducted research from a global perspective and concluded that green finance indeed promoted regional development. If the policy was issued in the form of recommendations, it would promote the development of green finance [13]. Soundarajan, P and others discussed the feasibility of green finance in India based on the national conditions of India, and finally confirmed that green finance plays an indispensable role in social and environmental aspects [28]. Tolliver, C and others analyzed the data of Asian countries and concluded that green finance played an incentive role in the environmentally sustainable development of countries, and increased the importance of countries to environmental information disclosure [29]. By observing the performance of investors on the green finances of enterprises, Flammer, C found that increasing the attention of enterprises on green finance promotes investors’ confidence in them [30].

2.2. Literature on High-Quality Development of Enterprises

For the sake of achieving the goal of double carbon, China has to sustain the balance between economy and environment, and at the same time, require sustained economic growth, while economic development will ultimately be based on enterprise development. Therefore, enterprises must be guided to develop in the direction of high quality [31]. Pan, X. F and others pointed out that the low carbon policy, with the participation of the government, has indeed played an incentive role in the development of enterprises toward high quality [32]. Chen, H and others confirmed that low carbon policy could make enterprises play a positive role in the environment while developing toward high quality by analyzing the data of listed companies [33]. Tianjiao Zhao et al. think that the development of regional transportation affects the development of enterprises in the direction of high quality through the analysis of the data of local transportation degree [34]. Since most of the researchers’ research on companies focuses on the financial performance of companies, references in this field are very rare.

2.3. Hypothesis

Based on the previous literature, we cannot speculate how green finance affects advancing enterprise development toward high quality. Green finance puts forward more requirements for enterprises [35], which requires enterprises to invest more funds to protect the environment and increase production costs. Therefore, it will lead enterprises to reduce their investment in production efficiency and reduce their high-quality development [36,37]. However, according to Porter’s hypothesis, although green financial policies will increase enterprises’ investment in environmental protection in the short run and affect short period profits, they will increase R&D investment and promote enterprise innovation, which will promote enterprise development in the long run [38,39,40]. Therefore, presumption 1(a) is raised: green finance policy reform will promote high-quality development of enterprises; meanwhile, the opposite hypothesis 1(b) is put forward: green finance policy will inhibit advancing enterprise development toward high quality.

As China’s current capital market is imperfect, the main difficulties faced by enterprises are a lack of funds, narrow financing channels, and high financing costs caused by financing constraints [41]. Therefore, green finance policies guide financial institutions to provide relevant funds to qualified enterprises, which alleviates the financing constraints of relevant enterprises [20,25,26,42]. After obtaining sufficient funds, enterprises can optimize their organization and improve their management, to prevent them from failing to reach the maximum production scale due to a lack of necessary funds and falling into a non-economic state of scale. At the same time, after obtaining funds, enterprises will increase domestic investment to promote technological innovation, fulfill the long-term goals originally set, and improve their financial performance [43]. It prevents enterprises from neglecting long-term benefits due to a lack of funds to make short-term profits, and ultimately promotes advanced company development toward high quality [44]. Therefore, hypothesis 2 is put forward: the reform of green financial policy will reduce the financing constraints of enterprises to advance company development toward high quality.

The development of enterprises to high quality needs the support of various resources, and funds are the guarantee of sufficient resources. To some extent, government subsidies shorten the time for subsidized enterprises to conduct external financing, help improve the investment and financing efficiency of enterprises, and advance their development toward high quality [45]. In order to achieve low-carbon goals and a two-oriented society and protect the environment, China has increased government subsidies and preferential tax policies, provided some funds for enterprises, eased the financial pressure caused by financing difficulties of some enterprises [46], and improved the investment efficiency of enterprises [47]; neoclassical economics believes that only sustained growth of productivity can achieve the expansion of the organization. The essence of productivity is production efficiency, which is usually expressed as the ratio of input and output. According to the input–output function, if the input factors remain unchanged and you want to obtain more output, you need to improve the innovation level of enterprises. Therefore, government subsidies provide sufficient funds for innovation, making enterprises improve their innovation ability [48,49], better integrate the internal resources of enterprises, optimize the operation methods of enterprises, and promote advancing enterprise development toward high quality [50]. Therefore, hypothesis 3 is proposed: the reform of green financial policy will enable enterprises to obtain more government support to advance their development toward high quality.

As the Chinese government announces its green financial policy, supporting all enterprises to incorporate environmental factors into their planning system and gradually move toward green development, enterprises are required to assume corresponding social responsibilities [51]. According to the signal transmission theory and stakeholder theory, enterprises undertaking corresponding social responsibilities will establish a good reputation and image, improve the confidence of external investors and consumers, alleviate the internal and external information asymmetry of enterprises, ease the constraints of enterprise financing, attract external funds [52], and promote enterprise innovation [53]. Moreover, according to the resource dependence theory, a good social reputation is an irreplaceable and scarce resource, which will help enterprises gain competitive advantages over other enterprises and promote the development of the company to high quality [47]. CSR itself is an investment from which all stakeholders can obtain rewards [54]. If the enterprise actively undertakes social responsibility, it will give positive incentives to employees, and at the same time, it can convey a responsible image to external stakeholders, so it will bring sufficient resources to promote production activities [55], thus promoting advancing company development toward high quality [50]. Therefore, hypothesis 4 is put forward: the reform of green financial policy will enable enterprises to assume more social responsibility support to advance their development toward high quality.

It has been six years since the implementation of the green finance reform pilot policy. Since the predecessors mainly studied whether the green finance reform pilot has played a role in environmental protection, the impact of the green finance reform pilot on advancing company development toward high quality is still unclear. As a consequence, it is significantly important to study how the green finance pilot reform affects advancing company development toward high quality. Our research on this issue will help to further promote the green financial policy and help China achieve sustainable development as soon as possible.

3. Research Design

We collected relevant data through the Internet and built relevant models for our research based on the double difference model.

3.1. Data Section

3.1.1. Data Sources

We took the green finance pilot reform officially implemented by the Chinese government in “five provinces and eight cities” in 2017 and the new green finance pilot reform of Lanzhou New Area in Gansu Province in 2019 as the quasi-natural experiment, and selected the companies in Shanghai and Shenzhen stock markets that continue to operate from 2007 to 2021 as the research samples. For the sake of improving the accuracy and validity of the research samples, we conducted the following: (1) ST (special treatment) and ST * (delisting risk warning) were excluded. (2) Companies with incomplete data were excluded. Finally, 33,593 sample observations were obtained, all of which were from CSMAR database and CNRDS database.

3.1.2. Variable

Total Factor Productivity (TFP)

This paper used GEG’s practice [56] as a proxy of TFP to judge whether the enterprise is developing with high quality. At present, there are two methods (LP method and OP method) to calculate TFP. Since the OP method requires a monotonously increasing relationship between investment and productivity, it means that there is a lack of samples where investment is zero. In fact, because companies do not necessarily have positive investments every year, the OP method has certain limitations. The LP rule improves the OP method, and its most prominent innovation is how the intermediate product input index is used as a proxy variable [57]. Since more proxy variables can be selected by LP method, researchers are more flexible in selecting proxy variables [58]. Therefore, TFP counted by LP method is taken as the explained variable, and TFP counted by OP method is taken as the robustness test.

The model used to calculate TFP is as follows:

$$\ln \left(Y_{i,t}\right)={\mathsf{\theta }}_0+{\mathsf{\theta }}_l\ln \left(L_{i,t}\right)+{\mathsf{\theta }}_k\ln \left(K_{i,t}\right)+{\mathsf{\theta }}_m\ln \left(M_{i,t}\right)+{\mathsf{\epsilon }}_{i,t}$$

(1)

In Equation (1), $Y_{i,t}$ is the operating income of t enterprise in year I, $L_{i,t}$ is the number of employees of t enterprise in year I, $K_{i,t}$ is the capital expenditure of t enterprise in year i, and $M_{i,t}$ is the cash flow generated by the purchase of goods and services to measure the input of intermediate products. The output variable, intermediate input variable and capital input variable are, respectively, reduced by the factory price index of industrial producers, the purchase price index of industrial producers and the investment price index of fixed assets. Taking the natural logarithm of the residual value, we obtained the TFP level of enterprises under the LP method.

Dummy Variable

This paper took the operating time of listed companies as $tim{e}_i$: if after the green finance pilot reform in 2017, the enterprise’s operating time was recorded as $tim{e}_i$ = 1; if before the green finance pilot reform in 2017, the enterprise’s operating time was recorded as $tim{e}_i$ = 0. At the same time, this paper took the location of the listed company as $trea{t}_t$: if the location of the listed company was within the reform pilot area, it was marked as $trea{t}_t$ = 1; if the listed company was located outside the reform pilot area, it was recorded as $trea{t}_t$ = 0. DID = $trea{t}_t*tim{e}_i$.

Control Variable

This article took advantage of the method of ZHAOTJ [34] as a reference to select control variables and considered that there might be other variables that would affect the accuracy of this study; so, this article chose the following control variables.

3.2. Methodology

The problem of endogenous problems can be avoided to a large extent: policies are generally exogenous relative to microeconomic entities, so there is no reverse causal problem. In addition, the use of fixed effect estimation also alleviates the problem of missing variable bias to some extent. (2) The traditional way to evaluate the policy effect is to set a dummy variable of whether the policy occurs or not and then carry out regression. In contrast, the model setting of the double difference method is more scientific and can estimate the policy effect more accurately.

To determine how the pilot reform of green finance affected advancing enterprise development toward high quality, this paper constructed the differential model as follows:

$$TF{P}_{i,t}={\beta }_0+{\beta }_{1}DI{D}_{i,t}+{{\displaystyle \sum }}_j^n{a}_{j}control+{\mathsf{\mu }}_i+{\mathsf{\eta }}_i+{\mathsf{\delta }}_i+{\mathrm{z}}_i+\mathsf{\epsilon }$$

(2)

$\mathit{T}\mathit{F}{\mathit{P}}_{\mathit{i},\mathit{t}}$ represents the TFP of company t in year I, and the core explanatory variable is $\mathit{D}\mathit{I}{\mathit{D}}_{\mathit{i},\mathit{t}}$, which is a double difference estimator. If the enterprise is in the policy implementation area and after the policy implementation, then the value of t enterprise is in year I and later, $\mathit{D}\mathit{I}{\mathit{D}}_{\mathit{i},\mathit{t}}$ is 1; otherwise, it is 0. ${\mathsf{\beta }}_{\mathbf{0}}$ is the constant term of the model, ${\mathsf{\beta }}_{\mathbf{1}}$ represents the impact of pilot reform of green finance policy on advancing company development toward high quality. If ${\mathsf{\beta }}_{\mathbf{1}}$ is positive, the implementation effect of the policy is the same as expected. $\mathit{c}\mathit{o}\mathit{n}\mathit{t}\mathit{r}\mathit{o}\mathit{l}$ is the control variable in this paper. For the sake of excluding the influence of different companies, different years, different provinces, and different industries, this paper adds corresponding fixed effects (${\mu }_{\mathit{i}}$, ${\eta }_{\mathit{i}}$, ${\delta }_{\mathit{i}}$, $z_{\mathit{i}}$), $\epsilon$ as a random error term.

4. Empirical Research

First, we conducted correlation analysis on the data, and then conducted basic regression on the model.

4.1. Descriptive Statistics

Descriptive statistics of each variable are shown in

Table 1. Introduction to variables.

Variable	Symbol	Definition
Tobin q value	Tobin-Q	Compare the value of the enterprise in the market with the value of its replacement
Financial leverage	DFL	EBIT/(EBIT – interest − preferred dividends/(1−income tax rate))
Proportion of shares held by controlling shareholders	FIR	Proportion of the largest shareholder’s shareholding
Proportion of total shares held by the top ten shareholders	SHA1-10	Sum of the shareholdings of the top 10 shareholders
Developing capacity	GRO	(Operating revenue amount in the current quarter of this year − amount in the previous quarter of operating revenue)/amount in the previous quarter of operating revenue
Operating cash flow	CFO	Net cash flow from operating transactions and activities (unit: $billion)
Asset liability ratio	DAR	Total liabilities/total assets during the year

and

Table 2. Descriptive statistics table.

Variables	n	Mean	Sd	Min	Max
TFP	33,539	9.040	1.119	5.615	13.643
DID	33,539	0.152	0.359	0	1
Tobin-Q	26,477	2.135	4.439	0.641	715.945
DFL	26,477	1.530	15.286	−106.261	2402.774
FIR	26,477	34.439	15.329	0.29	100
SHA1-10	26,477	58.849	16.306	1.32	100
GRO	26,477	−6.246	127.639	−191,776.9	8072.186
CFO	26,477	8.715	77.028	−434.5693	3666.55
DAR	26,477	0.427	0.213	0.007	4.026

, including the main indicators of each variable.

4.2. Basic Regression Analysis

As seen in

Table 3. The influence of green financial policy on TFP.

	(1)	(2)
Variables	TFP	TFP
DID	0.034 ** (2.28)	0.028 * (2.54)
Tobin-Q		−0.015 *** (−7.13)
DFL		−0.006 *** (−6.27)
FIR		−0.003 *** (−7.11)
SHA1-10		0.005 *** (12.84)
GRO		1.17 × 10−6 (0.04)
CFO		0.001 *** (10.01)
DAR		1.223 *** (48.84)
Constant	9.039 *** (3052.66)	8.501 *** (359.66)
Four fixed effects	Controlled	Controlled
Observations	33539	26477
R-squared	0.867	0.908

T value in parentheses. * p < 0.1, ** p < 0.05, *** p < 0.01. Source: author’s estimations.

(1), the DID coefficient is 0.034. Column (2) shows the results when both the control variable and the fixed effect case are added, and the coefficient of DID is 0.028. To summarize, the pilot reform of green finance policy has made great achievements in accelerating high-quality enterprise development, satisfying hypothesis 1(a).

5. Further Examination

We conducted the following robustness tests and further tests on the data results of the previous step.

5.1. Robustness Check

In this paper, to exclude conclusion contingency, relevant robustness tests were conducted, which included a parallel trend test, a placebo test, replacing the explained variables, and excluding other policy influences, to prove that the findings of the former paper on the pilot reforms of green financial policy on the high-quality development level of firms are reliable.

5.1.1. Parallel Trend Test

The pilot reforms in green finance conducted in 2017 were based on the guidance issued in 2016 for the construction of green financial systems. Although the green financial policy pilot was implemented starting in 2017, the Chinese government issued guidance on constructing a green financial system in 2016, in which the decision to construct a region with a green financial pilot was made explicitly. Therefore, this paper argues that the guidance on constructing a green financial system issued in 2016 will release positive signals to the market to some extent, leading pilot region firms to establish their production strategies earlier, and thus positively affecting firms’ all-factor productivity. There is an announcement effect. As can be seen in Figure 1, before 2016 (pre_1), the coefficients of dummy variables in the middle of the two groups were consistent, while in 2016 and after, the coefficients of dummy variables between the two groups began to be different, which passed the test.

5.1.2. Placebo Test

In this paper, 500 repetitions of random sampling were performed for the interaction term, and it can be clearly observed in Table 3 that the random sampling coefficients were mean with zero, normally distributed, and only a few of the estimated outcomes had t-values greater than the benchmark regression results.

Table 4. Robustness check: replace interpreted variable.

	(1)	(2)
Variables	TFP(OP)	TFP(OP)
DID	0.027 * (2.43)	0.023 * (2.32)
Tobin-Q		−0.006 *** (−3.14)
DFL		−0.005 *** (−6.4)
FIR		−0.002 *** (−5.82)
SHA1-10		0.003 *** (9.15)
GRO		2.36 × 10−5 (0.78)
CFO		0.001 *** (6.68)
DAR		0.835 *** (38.04)
Constant	6.538 *** (2345.07)	6.229 *** (291.04)
Four fixed effects	Controlled	Controlled
Observations	39,877	26,477
R-squared	0.796	0.873

T value in parentheses. * p < 0.1, *** p < 0.01. Source: author’s estimations.

shows the p-value plot, which is the distribution of estimated coefficients from random sampling. Figure 2 and Figure 3 indicate that the model setting is reasonable and there is no problem with missing explanatory variables, which again supports the research conclusion of this paper.

5.1.3. Substituting out Explanatory Variables

The robustness test was performed using TFP calculated by the OP method. It can be observed from column (1) that DID coefficient is 0.027. Column (2) shows the results when both the control variable and the fixed effect case are added, with the coefficient on DID being 0.023. Taken together, the above research held that the pilot reform of green finance policy made great achievements in accelerating high-quality enterprise development. The conclusion of the robustness test is largely consistent with the conclusion above. The benchmark conclusions obtained in this paper are, therefore, somewhat robust.

5.1.4. Implications of Excluding Other Policy Effects

In 2018, the Chinese government officially implemented an environmental protection tax law. According to the research, this policy can improve the production efficiency of enterprise factors. As a consequence, this paper removes the data after 2018 and conducts a new regression. Observing

Table 5. Eliminate other policy interference.

	(1)	(2)
Variables	TFP	TFP
DID	0.053 ** (2.79)	0.045 * (2.55)
Tobin-Q		−0.025 *** (−8.57)
DFL		−0.022 *** (−9.85)
FIR		−0.003 *** (−6.00)
SHA1-10		0.006 *** (14.04)
GRO		−2.19 × 10−6 (−0.07)
CFO		0.001 ** (2.64)
DAR		1.099 *** (35.19)
Constant	8.934 *** (3127.23)	8.412 *** (280.07)
Four fixed effects	Controlled	Controlled
Observations	20,527	16,031
R-squared	0.890	0.923

T value in parentheses. * p < 0.1, ** p < 0.05, *** p < 0.01. Source: author’s estimations.

, (1) is the result when no control variable is added, only a fixed effect is added, and DID coefficient is 0.05. Column (2) shows the results when both the control variable and the fixed effect case are added, and the coefficient of DID is 0.045. Taken together, the above research held that the pilot reform of green finance policy has advanced enterprise development toward high quality, excluding the influence of other factors on the results of this paper.

5.2. Mechanism Study

5.2.1. The Mediating Effects of Financing Constraints

The explained variable in

Table 6. Intermediary test results of financing constraints.

	(1)	(2)	(3)
Variables	TFP	SA	TFP
SA			−0.197 *** (−4.70)
DID	0.028 * (2.54)	−0.003 * (−2.00)	0.027 * (2.48)
Tobin-Q	−0.015 *** (−7.13)	0.004 *** (11.52)	−0.014 *** (−6.77)
DFL	−0.006 *** (−6.27)	0.001 *** (3.00)	−0.006 *** (−6.18)
FIR	−0.003 *** (−7.11)	−0.001 *** (−5.55)	−0.003 *** (−7.28)
SHA1-10	0.005 *** (12.84)	0.002 *** (29.92)	0.005 *** (13.52)
GRO	1.17 × 10−6 (0.04)	−6.52 × 10−6 (−1.29)	1.13 × 10−7 (−0.00)
CFO	0.001 *** (10.01)	0.001 *** (45.97)	0.001 *** (10.95)
DAR	1.223 *** (48.84)	−0.017 *** (−4.28)	1.220 *** (48.71)
Constant	8.500 *** (359.66)	−3.858 *** (−1036.58)	7.740 *** (47.36)
Four fixed effects	Controlled	Controlled	Controlled
Observations	26,477	26,477	26,477
R-squared	0.901	0.962	0.909

T value in parentheses. * p < 0.1, *** p < 0.01. Source: author’s estimations.

column (1) is the high-quality development of enterprises (TFP), and DID coefficient is 0.028. This shows that green finance policy reform significantly improves TFP. It can be observed from column (2) that when financing constraints are taken as explained variables (SA), the financing constraint (SA) coefficient is −0.003. It can be observed that green finance policy reform significantly reduces the level of corporate financing constraint (SA). As can be seen from column (3), when the explained variable is the high-quality development of enterprises (TFP), the DID coefficient is 0.027, and the financing constraint coefficient is −0.197. It can be observed that financing constraints play a partial intermediary role in the process of green finance reform to improve TFP. In conclusion, the pilot reform of green finance policy has made great achievements in accelerating high-quality enterprise development by reducing the financing constraints of a corporation, conforming to hypothesis 2.

5.2.2. Mediating Effects of Government Subsidies

In

Table 7. Intermediary test results of government subsidies.

	(1)	(2)	(3)
Variables	TFP	Subsidies	TFP
Subsidies			0.006 ** (2.90)
DID	0.043 ** (2.92)	0.203 ** (2.95)	0.048 ** (2.85)
Tobin-Q	−0.022 *** (−8.96)	−0.036 ** (−3.12)	−0.022 *** (−8.88)
DFL	−0.012 *** (−6.25)	−0.003 (−0.36)	−0.013 *** (−6.24)
FIR	−0.005 *** (−7.38)	0.005 (1.61)	−0.005 *** (−7.42)
SHA1-10	0.004 *** (9.55)	−0.001 (−0.42)	0.004 *** (9.57)
GRO	9.51 × 10−6 (0.29)	−6.84 × 10−6 (0.05)	9.31 × 10−6 (0.29)
CFO	0.001 *** (6.37)	−0.011 *** (−22.20)	0.001 *** (6.82)
DAR	1.254 *** (37.40)	0.334 (2.13)	1.252 *** (37.35)
Constant	8.595 *** (268.51)	0.346 *** (2.31)	8.593 *** (268.47)
Four fixed effects	Controlled	Controlled	Controlled
Observations	14,769	14,769	14,769
R-squared	0.935	0.695	0.935

T value in parentheses. ** p < 0.05, *** p < 0.01. Source: author’s estimations.

(1) column, it can be observed that while the explanatory variable is the high-quality development of firms (TFP), DID coefficient is 0.043, indicating that the green financial policy reform significantly improves TFP. It can be seen from column (2) that when government subsidies are taken as explained variables, the government subsidies coefficient is 0.203. This shows that the pilot reform of green finance policy has made enterprises obtain government support. It can be observed from column (3) that when TFP is taken as the explained variable, the DID coefficient is 0.048, and the government subsidy coefficient is 0.006, indicating that government subsidies play a partial intermediary role in the process of green finance reform to improve TFP. In summary, the reform of green finance policy will enable enterprises to obtain more government support to advance their development toward high quality, conforming to hypothesis 3.

5.2.3. Mediating Effects of CSR

It can be observed from

Table 8. Intermediary test results of CSR.

	(1)	(2)	(3)
Variables	TFP	CSR	TFP
CSR			0.005 *** (19.10)
DID	0.024 * (2.18)	1.021 ** (2.82)	0.020 * (2.19)
Tobin-Q	−0.013 *** (−5.75)	0.116 (1.62)	−0.013 *** (−6.07)
DFL	−0.004 *** (−3.34)	−0.153 *** (−4.30)	−0.003 * (−2.72)
FIR	−0.005 *** (−8.33)	0.0001 (−0.00)	−0.005 *** (−8.43)
SHA1-10	0.005 *** (10.21)	−0.001 (−0.80)	0.005 *** (10.45)
GRO	−0.0002 (−0.78)	−0.0002 (−0.24)	−0.0002 (−0.75)
CFO	0.001 *** (7.31)	−0.018 *** (−5.77)	0.001 *** (8.28)
DAR	1.156 *** (37.82)	0.242 (0.24)	1.55 *** (38.22)
Constant	8.617 *** (291.97)	26.145 *** (27.41)	8.494 *** (284.29)
Four fixed effects	Controlled	Controlled	Controlled
Observations	18,566	18,566	18,566
R-squared	0.933	0.545	0.935

T value in parentheses. * p < 0.1, ** p < 0.05, *** p < 0.01. Source: author’s estimations.

(1) that when the explained variable is the high-quality development of enterprises (TFP), the DID coefficient is 0.024, indicating that green finance policy reform improves TFP. It can be observed from column (2) that when CSR is taken as the explained variable, the CSR coefficient is 1.021, which indicates that green finance policy reform significantly improves the fulfillment of CSR. It can be observed from column (3) that when TFP is taken as the explained variable, the DID coefficient is 0.020, and the corporate social responsibility (CSR) coefficient is 0.005. It shows that CSR plays a partial intermediary role in the process of green finance reform to improve TFP. In conclusion, the reform of green finance policy will strengthen the fulfillment of corporate social responsibility to advance their development toward high quality, conforming to hypothesis 4.

5.3. Test for Heterogeneity

5.3.1. Tests for Heterogeneity across Property RIGHTS Properties

China is a socialist country with a co-ownership system as the main body. Compared with other countries, China has a unique property right nature—state-owned enterprises. In order to consider whether the impact of green finance on state-owned enterprises and non-state-owned enterprises (other enterprises) is different, we grouped them according to the nature of different enterprises. State-owned enterprises are established with state investment and managed by departments authorized by the state. In cases of state ownership, the state also appoints state functionaries to enter the enterprises to preside over their production and operation activities. It is different from state organs that specialize in certain state administrations. Although state-owned enterprises are both profitable and non-profit, the most important function of state-owned enterprises is to implement national planned economic policies, take charge of national economic management and realize national economic regulation or other national policies, and maintain the sustainable and stable growth of the national economy. The reform of green finance policy is the long-term policy of the Chinese government for the sound development of the ecological environment and sustainable social development. As the direct investment object of the government, state-owned enterprises represent the attitude of the government to some extent. Therefore, state-owned enterprises are the “vanguard army” to implement national policies. At the same time, because many state-owned enterprises provide public goods and public services, and some state-owned enterprises undertake important special tasks, so they are closely related to fiscal expenditure, sometimes financial subsidies are necessary and reasonable; additionally, because key managers of state-owned enterprises are sent or decided by the government, they are more closely connected with the government and more familiar with government workers. Therefore, in the process of policy implementation, it is easy for some state-owned enterprises to obtain undeserved government subsidies. Moreover, since state-owned enterprises are funded by the state, they can obtain more funds and significantly reduce their own financing constraints in the process of policy implementation. Since the 18th CPC National Congress, the Chinese government has emphasized that enterprises should improve economic and social benefits; SOEs are not only for profit, but it is more important for them to be accountable to stakeholders, society, and the environment to maximize the integrated economic, social, and environmental value, and to promote sustainable development; so, SOEs need to be more socially responsible. The green financial policy itself is to protect the environment, and low-carbon development requires enterprises to pay attention to social benefits and take social responsibility; the functions of SOEs include supporting the national policy, and they necessarily undertake more social responsibility than non-SOEs to protect the environment.

Table 9. Grouping test of property rights of different companies.

	(1)	(2)
Variables	TFP
	SOEs	Non-SOEs
DID	0.029 * (3.510)	0.101 (0.75)
Tobin-Q	−0.008 * (−1.75)	−0.016 *** (−6.95)
DFL	−0.006 *** (−4.80)	−0.005 *** (−4.27)
FIR	−0.00003 (−0.04)	−0.004 *** (−7.17)
SHA1-10	0.006 *** (10.55)	0.005 *** (9.78)
GRO	0.00001 (0.28)	−2.09 × 10−6 (−0.05)
CFO	0.001 *** (5.69)	0.002 *** (11.69)
DAR	1.065 *** (25.83)	1.118 *** (35.30)
Constant	8.628 *** (206.11)	8.410 *** (287.20)
Four fixed effects	Controlled	Controlled
Observations	9984	16,383
R-squared	0.925	0.899

T value in parentheses. * p < 0.1, *** p < 0.01. Source: author’s estimations.

shows the results of grouping regression by dividing the samples into state-owned enterprises and non-state-owned enterprises. In column (1), it can be observed that when the explained variable is TFP, the sample is the group of state-owned enterprises, and the DID coefficient is 0.029, reflecting that the green financial reform pilot has truly and effectively advanced their development toward the high quality of state-owned enterprises. In column (2), it can be observed that when the explained variable is TFP, the sample is the group of state-owned enterprises, and the DID coefficient is 0.101, but it is not significant. It can be observed that the pilot reform of green finance has not really and effectively advanced their development toward the high quality of non-state-owned enterprises. Table 9 confirms the correctness of the above argument.

5.3.2. Heterogeneity Test among Firms in Different Industries

Green financial policy concentrates on the protection of the ecological environment as well as the governance of environmental pollution, hoping that the enterprises will engage in projects in the fields of environmental protection, energy saving, clean energy, green traffic, green construction, and so on, so the investment in the above-mentioned industries is increased, and the financing of non-high-pollution enterprises will be approximately less constrained than that of high-pollution their enterprises. As early as 2007, the Chinese government proposed a two-oriented society and Environmental Sustainability. With the announcement of the green finance policy reform, the Chinese government attaches more and more importance to the environment. Therefore, the government will provide incentive subsidies to enterprises with low pollution to show its determination to support the development of relevant industries. Therefore, non-high-polluting enterprises will receive more government subsidies than high-polluting enterprises to advance their development toward high quality.

Table 10. Heterogeneity test of companies in different industries.

	(1)	(2)
Variables	TFP
	High-Pollution Industry	Non-High-Pollution Industries
DID	0.020 (1.09)	0.039 ** (3.43)
Tobin-Q	−0.0002 (−0.05)	−0.009 *** (−3.23)
DFL	−0.005 *** (−3.86)	−0.005 *** (−4.01)
FIR	0.006 *** (4.95)	−0.007 *** (−12.27)
SHA1-10	0.0001 (0.17)	0.005 *** (11.93)
GRO	−0.00002 (−0.52)	0.00003 (0.74)
CFO	0.001 *** (7.44)	0.001 *** (7.31)
DAR	0.676 *** (17.14)	1.413 *** (45.08)
Constant	8.740 *** (223.22)	8.490 *** (287.97)
Four fixed effects	Controlled	Controlled
Observations	8022	18,381
R-squared	0.922	0.915

T value in parentheses. ** p < 0.05, *** p < 0.01. Source: author’s estimations.

shows the results of grouping the sample into high-pollution firms and non-high-pollution firms for regression. In column (1), it can be observed that when the explained variable is TFP, the sample is a subgroup of high-pollution firms, and DID coefficient is 0.020, but it is not significant, which shows that the green financial pilot reform has really effectively promoted advancing their development toward high quality. In column (2), it can be observed that when the explained variable is TFP, the sample is a subgroup of non-high-pollution firms, and the coefficient of DID is 0.039, indicating that the green financial pilot reform was real and effective in accelerating high-quality development in non-high-pollution firms. Table 10 confirms the correctness of the above argument.

6. Conclusions and Policy Recommendations

After relevant tests, we obtain the final conclusion through the analysis of the data and put forward feasible suggestions.

6.1. Conclusions

This paper considers the 2017 green financial pilot reform event as a quasi-natural experiment, based on 33,539 sample observations from 2007 to 2021, and studies the impact of green financial reform on advancing company development toward high quality utilizing a difference in difference (DID) model, and finds the related impact path, which is summarized as follows:

Through benchmark regression results, it is observed that green finance policy significantly and positively promoted the high-quality development of enterprises. These results are re-verified by replacing the explained variables, excluded the effects of other policies, and testing the placebo.

Through further inspection, it is found that green finance policy reform can provide financial support to enterprises in the development process, reduce enterprises’ financing constraints, and thus positively affect advancing their development toward high quality. Moreover, the reform of green finance policy can provide more government subsidies for enterprises in their development process, thus positively affecting advancing their development toward high quality. At the same time, green finance policy reform can encourage enterprises to assume social responsibilities and obtain social benefits, thus positively affecting advancing their development toward high quality.

It is found through the heterogeneity test that green financial policy reforms have different effects on firms with different properties of property rights and firms in different industries. The green financial reform has a real promotional effect advancing the development of the high quality of SOEs, but not for non-SOEs. The green financial reform has really produced a boost to the high-quality development level for non-high-pollution firms, but not for high-pollution firms.

6.2. Policy Suggestion

• Although the government has introduced relevant green finance policies to support the development of green finance, financial institutions are not highly motivated even if green finance services have positive spillover effects on the public environment, because of the difficulty in getting effective and reasonable compensation for the costs of related businesses. The performance assessment system of China’s financial industry usually focuses on economic palliation, and environmental protection indicators are rarely included in the relevant assessment scope. Therefore, banks and other financial institutions seldom consider whether the service objects have ecological benefits while pursuing interests, ignoring the implementation effect of green finance policies, resulting in how enterprises in real need do not obtain relevant funds. The government only introduced policies and regulations to restrict the behaviors of financial institutions but lacked substantial incentive measures, which resulted in the implementation results of green finance policies being greatly reduced. In view of the above, this paper argues that reasonably sound binding incentives should be established. The government links the service effectiveness of green financial policy to the performance assessment of various financial institutions; financial institutions should link the service effectiveness of chromo financial policy to each employee’s performance assessment to exploit the green financial services market from internal incentives for employees. The government strengthens related monitoring, and it is important to guarantee that preferential loans regarding green finance projects actually reach the hands of the firms in need, rather than being encroached on by notorious projects, in order to perfect the green financial system, create more financing tools, expand the size of the green financial indirect financing market, truly alleviate the problems of financing difficulties of related enterprises, and ensure advancing their development toward high quality.
• Some provinces and cities put forward incentive measures such as discount interest, fund reward, and re-loan support when constructing local green finance systems, but lack the corresponding implementation rules and award and subsidy standards, which makes the implementation of fiscal and tax preferential policies lack a basis. Although some local governments have issued detailed awards and subsidies, they lack supporting standards for identifying green enterprises and green projects, which leads to obstacles in the implementation of awards and subsidies and, to some extent, hinders the realization of local green finance development goals. In addition, some provinces and cities do not fully consider the basic local conditions when formulating fiscal and tax incentives. For example, the financial strength of western inland regions is different from that of coastal regions, and the support for green finance, such as guarantee and credit increase, financial awards and subsidies, and risk compensation, is insufficient. As a result, the incentive plan cannot be fully implemented, and the relevant government subsidies that should be paid to enterprises find it difficult to reach them. Therefore, the government should strengthen relevant supervision, implement the implementation of policies, optimize the organization and leadership mode, improve planning and design, strengthen the division of labor and coordination between departments, refine assessment and evaluation, avoid the above situation, improve relevant subsidy policies, and grant subsidies to enterprises in line with subsidy policies in a timely manner.
• The company will often ignore social responsibility at the same time, only pursue benefits, and lack the attitude of being responsible for the consumer and being responsible for the social environment; the company only values its own economic interests and neglects other aspects, which leads to the difficulty of establishing a good image for the enterprise. It becomes difficult for the enterprise to form a good social reputation, which will affect advancing its development toward high quality. Therefore, the corporate development process should continuously raise the awareness of social responsibility, establish a “citizen” awareness, and meet its corresponding responsibilities while enjoying the convenience of national economic development, to establish a corporate system with social responsibility and establish clear responsibility management. Fundamentally, enterprises must not only focus on their immediate interests, but also place goals on a more distant dimension. The government should strengthen the publicity of corporate social responsibility, strengthen the guidance of corporate CSR, establish an effective reward and punishment system, get rid of unreasonable systems, and guide enterprises to fulfill their social responsibilities. It should also strengthen relevant supervision, focus on non-compliance enterprises, and urge them to rectify. We will strengthen cooperation between enterprises and the government, encourage enterprises to assume social responsibilities, and promote their high-quality development.
• After the reform of state-owned enterprises, China has changed the subordinate relationship from the subordinate relationship to a property ownership relationship, and the single administrative relationship to a dual relationship coexisting with law and administration. Because of the long-term formation of inextricable links, the government and enterprises are still hard to distinguish. So the government gives special attention to state-owned enterprises, whether through taxes or subsidies. State-owned enterprises are backed by the government, which amounts to a credit endorsement, and can borrow from banks and other financial institutions with relative ease. Although it has to assume more social responsibilities, it will gain a good corporate image by relying on government credibility. However, non-SOEs survive in the cracks, and the existing resources are crowded out by state-owned enterprises in the case of limited funds, which leads to hindered development. Therefore, when the green finance policy is promulgated, specific policy support should be put forward for non-state-owned enterprises, which should give consideration to short-term rescue and structural adjustment, cultivate the potential of non-state-owned enterprises, and actively play the role of non-state-owned enterprises. For example, tax reduction and rebate policies for non-state-owned enterprises will be implemented simultaneously, the scope of reduction and exemption will be increased, the scope of application will be expanded, and explicit policies will be formulated to strengthen fiscal subsidies. We will take targeted measures to increase effective financial support for the real economy and promote the growth of Pratt and Whitney small and micro-loans; we will optimize loan procedures for non-state-owned enterprises that are severely affected by the epidemic, and avoid industry-related loan restrictions, loan withdrawals, and loan suspension. We will expand the coverage of government-funded financing guarantees to non-state-owned enterprises and solve financing difficulties for the real economy, especially for non-state-owned enterprises. We will maintain a fair and orderly market environment, reduce the production and operation costs of enterprises, lower the fees charged by enterprises on platforms, and ease the burden on non-state-owned enterprises. We will increase support for public employment services and improve the quality and ability of employment. We will take concrete actions to advance non-state-owned enterprises’ development toward high quality.
• The green financial policy has various benefits to the environment, but the main income of high-pollution enterprises is derived from the pollution-producing projects; although high-pollution enterprises want to transform, they face a series of problems such as high fixation cost, difficulty in transformation, and lack of corresponding talents, which lead to high-pollution enterprises finding it difficult to transform, so high-pollution enterprises have a flat response to green financial policies. In this case, it is necessary for the government to make tailor-made plans for high-polluting enterprises, gradually guide the transformation of high-polluting enterprises, regulate the emission behaviors of high-polluting enterprises, carry out standardized remediation activities for high-polluting enterprises, and promote the technological transformation of high-polluting enterprises. The business side cannot rely solely on government help, and must develop a well-established environmentally friendly management system applicable to real-world production, detect transformation opportunities as early as possible, take the opportunity to transform in time, and pursue high-quality development.