The Impact of Green Finance on Corporate Green Innovation: Operating Cash Flow as a Mediating Channel

Main Article Content

Leyan Liu
Surrey International Institute, Dongbei University of Finance and Economics, Dalian 116025, China

DOI: https://doi.org/10.70267/fer.250303.5367

Keywords

green finance, corporate green innovation, cash flow, two-way fixed effects, transmission channels

Abstract

Against the institutional backdrop of the ongoing implementation of China’s “Dual Carbon” strategy and green finance policies, this paper examines the impact of green finance on corporate green innovation from the perspective of cash flow mediation. Based on panel data of Chinese A-share listed companies from 2015 to 2024, this study uses the green finance index as the core explanatory variable and corporate green innovation as the dependent variable. A two-way fixed effects model is constructed to test the underlying mechanism, heterogeneous effects and transmission mechanism of green finance. The baseline regression results show that green finance significantly promotes corporate green innovation, indicating that the development of green finance can provide important support for enterprises to carry out green technology research and green transformation. This conclusion remains valid after several robustness tests, including replacing the dependent variable and using the lagged core explanatory variable, which confirms the reliability of the empirical results. The heterogeneity analysis further shows that the effect of green finance is more significant in state-owned enterprises, highly profitable enterprises and heavily polluting enterprises. This suggests that enterprises with stronger resource advantages, better profitability or greater environmental pressure are more likely to benefit from green finance policies. The mediation test shows that cash flow is an important channel through which green finance promotes corporate green innovation. Green finance can improve firms’ operating cash flow, ease financial constraints in research and development activities, and indirectly encourage enterprises to increase green innovation investment. The results indicate that cash flow plays a partial mediating role, meaning that green finance affects green innovation through both direct and indirect channels. Overall, this paper enriches the empirical evidence on the micro-level effects of green finance and provides a reference for improving green finance policies and promoting enterprise green transformation under the “dual carbon” strategy.

Abstract 18 | PDF Downloads 5

References

  • [1] Li, R., & Liu, L. (2021). Green finance and corporate green innovation. Wuhan University Journal (Philosophy and Social Sciences), 74(6), 126–140. https://doi.org/10.14086/j.cnki.wujss.2021.06.012
  • [2] Li, Z., & Xu, Z. (2026). Theoretical logic, practical challenges, and implementation pathways for green finance development during China's Fifteenth Five-Year Plan period. Journal of Xinjiang Normal University (Philosophy and Social Sciences), (4), 1–9. https://doi.org/10.14100/j.cnki.65-1039/g4.20260508.002
  • [3] Guo, P., & An, G. (2026). Steady progress in the five pillars of green finance. China Finance, (3), 40–42.
  • [4] Guo, X. (2022). The impact mechanism and empirical examination of green finance in promoting the transition to a low-carbon economy. South China Finance, (1), 52–67.
  • [5] Meng, X., & Wu, C. (2025). The impact of green finance on the green transformation of the economy. Ecological Economy, 41(5), 158–167.
  • [6] Yan, J., & Jie, Q. (2025). How do green finance reform and innovation pilot zone policies affect urban low-carbon economic transition? A perspective from new structural environmental economics. Journal of Management, 38(5), 69–83. https://doi.org/10.19808/j.cnki.41-1408/F.2025.0049
  • [7] Su, J. (2026). Research on the development of green finance to promote the transformation and upgrading of economic restructuring. Journal of Innovation and Development, 14(2), 68–74. https://doi.org/10.54097/YKKWJV49
  • [8] Tu, Q., Zuo, L., & Zhang, X. (2025). Green finance and regional green development. Theory and Practice of Finance and Economics, 46(4), 11–18. https://doi.org/10.16339/j.cnki.hdxbcjb.2025.04.002
  • [9] Chen, M. (2023). The role of green finance in promoting high-quality regional economic development. Trade Fair Economy, (2), 143–145. https://doi.org/10.19995/j.cnki.CN10-1617/F7.2023.02.143
  • [10] Song, C. (2026). Analysis of the impact of green finance on regional economic development. Journal of Applied Economics and Policy Studies, 19(2), 72–82. https://doi.org/10.54254/2977-5701/2026.31897
  • [11] Tao, Z. (2023). Can green finance policies affect corporate financing? Evidence from China's green finance innovation and reform pilot zones. Journal of Cleaner Production, 419, Article 138289. https://doi.org/10.1016/j.jclepro.2023.138289
  • [12] Chen, Y., & Zhao, Y. (2023). Can green finance development alleviate financing constraints for small and micro enterprises? Empirical evidence from Chinese listed small and micro enterprises during 2009–2020. Journal of Changsha University of Science & Technology (Social Science Edition), 38(5), 101–110. https://doi.org/10.16573/j.cnki.1672-934x.2023.05.011
  • [13] Li, Z. (2023). Green finance policies and corporate financing constraints. Engineering Economics, 33(12), 53–73.
  • [14] Sun, Y., & Wang, D. (2025). Green finance and ESG performance of enterprises: Evidence from the Green Finance Reform and Innovation Pilot Zone. Applied Economics, 57(60), 11204–11218. https://doi.org/10.1080/00036846.2025.2450383
  • [15] Zhu, H., & Li, X. (2025). Can green finance improve corporate ESG performance? Empirical evidence from Chinese A-share listed companies. Asia-Pacific Journal of Accounting & Economics, 32(4), 590–607. https://doi.org/10.1080/16081625.2024.2371302
  • [16] Liu, L., & Zhang, Y. (2025). ESG performance, green finance, and corporate green innovation. Financial Theory and Practice, (4), 29–44.
  • [17] Sun, W., & Xu, F. (2026). ESG performance of “specialized, refined, distinctive, and innovative” enterprises and green finance: Relationship and influencing mechanisms. Finance and Accounting Monthly, Advance online publication. https://doi.org/10.16144/j.cnki.issn1002-8072.20260209.004
  • [18] Meng, J., & Zheng, R. (2025). The driving effect of green finance development on the ESG performance of energy enterprises under the “Dual Carbon” goals. Coal Economic Research, 45(12), 51–61. https://doi.org/10.13202/j.cnki.cer.2025.12.005
  • [19] Qin, Y. (2024). Research on the impact of green finance on carbon emissions of industrial enterprises (Doctoral dissertation, Sichuan University). https://doi.org/10.27342/d.cnki.gscdu.2024.000057
  • [20] Kang, C. (2024). Research on the mechanism and effects of green finance development on carbon emissions in China (Doctoral dissertation, Northeast Normal University). https://doi.org/10.27011/d.cnki.gdbsu.2024.000440
  • [21] Li, N., & Lan, G. (2025). The impact of green finance on corporate green innovation. Engineering Economics, 35(8), 31–42.
  • [22] Hu, Y., & Huang, Y. (2026). The value implications and optimization pathways for developing green finance in China during the Fifteenth Five-Year Plan period. Reform & Strategy, Advance online publication.
  • [23] Rennings, K. (2000). Redefining innovation: Eco-innovation research and the contribution from ecological economics. Ecological Economics, 32(2), 319–332.
  • [24] Wu, D. (2019). A review of domestic and international research on green innovation. Friends of Accounting, (16), 2–7.
  • [25] Wang, Y., & Zhou, Y. (2023). Green finance development and corporate innovation. Journal of Finance and Economics, 49(1), 49–62. https://doi.org/10.16538/j.cnki.jfe.20220615.101
  • [26] Xie, X., & Zhu, Q. (2021). How can corporate green innovation practices address the challenge of harmonious coexistence? Management World, 37(1), 128–149, 9. https://doi.org/10.19744/j.cnki.11-1235/f.2021.0009
  • [27] Guo, B., Wang, S., & Xu, F. (2026). The mechanism through which green finance affects green innovation in high-tech enterprises. Finance and Accounting Monthly, (8), 77–81. https://doi.org/10.16144/j.cnki.issn1002-8072.2026.08.015
  • [28] Tang, L., & Chen, X. (2024). Can digital finance mitigate the adverse effects of short-term debt financing for long-term investment on firms’ sustainable green innovation? China Population, Resources and Environment, 34(9), 123–131.
  • [29] Wen, J., & Feng, G. (2018). Venture capital and corporate innovation: A trade-off perspective between value creation and value appropriation. Economic Research Journal, 53(2), 185–199.
  • [30] Yang, G., & Xi, Y. (2019). An empirical study on financing constraints and corporate green technological innovation. Journal of Industrial Technological Economics, 38(11), 70–76.
  • [31] Hall, B. H. (2002). The financing of research and development. Oxford Review of Economic Policy, 18(1), 35–51.
  • [32] Zhu, Z., Lin, W., Zeng, A., & Hu, Y. (2023). The impact of “Green Factory” certification on corporate green innovation. Contemporary Finance & Economics, (7), 3–16. https://doi.org/10.13676/j.cnki.cn36-1030/f.2023.07.002
  • [33] Zhang, S., & Ren, C. (2025). The impact of green finance on high-quality agricultural development: Evidence from threshold and mediation effect models. Frontiers of Engineering Management Science and Technology, 44(4), 69–75.
  • [34] Du, L. (2024). Green finance, environmental investment, and corporate value: Evidence from corporate heterogeneity. Finance and Accounting Monthly, (23), 78–81. https://doi.org/10.16144/j.cnki.issn1002-8072.2024.23.008
  • [35] Wen, Z., & Ye, B. (2014). Analyses of mediating effects: The development of methods and models. Advances in Psychological Science, 22(5), 731–745.

Article Sidebar

PDF
Published
Jul 28, 2026
Issue
Vol. 3 No. 3 (2026)
Section
Research Articles
Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

How to Cite

Liu, L. . (2026). The Impact of Green Finance on Corporate Green Innovation: Operating Cash Flow as a Mediating Channel. Financial Economics Research, 3(3), 53-67. https://doi.org/10.70267/fer.250303.5367