Can Green Finance Promote the “Virtual-to-Real” Transition: Evidence from Green Finance Reform and Innovation Pilot Zones
WANG Yao, WANG Jinzhe, WU Zhenshu, WANG Wenwei
National Academy of Financial and Economic Strategy/ International Institute of Green Finance/ School of Finance, Central University of Finance and Economics; Business School, Shanghai Dianji University; Research Institute of the People's Bank of China
Summary:
Faced with domestic and international economic downturn pressures and the need for structural transformation, balancing short-term “growth stabilization” with long-term “structural adjustment” has become a core challenge for macroeconomic policy. The shift of corporate investment from the real economy to financial assets not only weakens the investment incentives of the real sector and exacerbates industrial hollowing-out but may also amplify financial risks, thereby hindering high-quality economic development. As President Xi emphasized, “The real economy is the foundation of finance, and finance is the lifeblood of the real economy.” This highlights that how the financial system serves the real economy and guides capital back to productive investment is a key pathway to achieve an organic integration of growth stabilization and structural adjustment. In this context, green finance, as an essential component of supply-side structural reforms, carries significant theoretical and practical importance in promoting corporate reorientation toward the real sector and tapping new growth momentum through institutional innovation and market guidance. Since the establishment of the first batch of green finance reform and innovation pilot zones in 2017, local practices have provided a quasi-natural experiment for evaluating the effectiveness of green finance policies. Based on data from A-share listed companies from 2012 to 2023, this study employs a difference-in-differences approach to identify policy effects and conducts multiple robustness checks to ensure the reliability of the conclusions. It systematically examines the impact of pilot zone policies on corporate “de-financialization,” their transmission mechanisms, and economic consequences. The main findings are as follows. First, the pilot zone policies significantly promote corporate “de-financialization,” by reducing firms' propensity to allocate assets toward financial instruments. Second, mechanism analysis shows that the policies operate through two channels: (i) internal governance mechanisms: by incentivizing firms to increase green R&D and green investment; and (ii) external governance mechanisms: by enhancing institutional investors' green attention. Third, heterogeneity analysis indicates that this effect is more pronounced in firms with lower internal governance, more severe financing constraints, and higher public environmental attention. Fourth, economic consequence analysis demonstrates that policy-induced “de-financialization” not only improves firms' sustainable performance but also reduces stock price crash risk, thereby achieving a micro-level synergy between growth stabilization and structural adjustment. Fifth, spatial analysis reveals that the pilot zone policies exert significant spillover effects on other firms within the same province. This study contributes in four key aspects. First, it identifies and systematically analyzes the “de-financialization” effect of green finance, expanding research boundaries on green finance from the perspective of growth stabilization and providing a new theoretical rationale for its development in the new era. Second, from the dual perspective of internal and external governance, it uncovers the transmission mechanisms of green finance policies, clarifying the critical roles of corporate green R&D investment and institutional investor attention, while conducting heterogeneity analysis based on governance quality, financing constraints, and public environmental awareness, offering micro-level evidence for differentiated policymaking. Third, the economic consequence analysis shows that promoting “de-financialization” through green finance can reduce stock price crash risk and enhance sustainable development performance, revealing the long-term value of these policies. Fourth, by comparing the effects across different pilot zones and examining intra-provincial spillovers, the study provides more comprehensive empirical evidence, enriching the literature on green finance policy effectiveness. Based on the empirical results, this study proposes several policy recommendations: (i) leverage the “guiding role” of green finance reform and innovation pilot zones to deeply integrate green finance into local traditional financial infrastructure, establish green credit evaluation mechanisms, and gradually expand pilot zones based on lessons learned to ensure that policy benefits reach more real-sector firms; (ii) improve the green finance policy system by creating a long-term mechanism balancing “incentives and constraints,” providing differentiated support through fiscal subsidies, tax incentives, and green credit, while strengthening environmental information disclosure and penalizing greenwashing to promote the rational flow of capital to the real economy; and (iii) enhance market participation mechanisms by strengthening the governance role of institutional investors, and encourage cross-sector collaboration among securities, banking, funds and insurance institutions to jointly innovate green financial products, thereby improving resource allocation efficiency.
王遥, 王瑾喆, 吴祯姝, 王文蔚. 绿色金融能否促进经济“脱虚向实”——基于绿色金融改革创新试验区的经验证据[J]. 金融研究, 2025, 546(12): 20-38.
WANG Yao, WANG Jinzhe, WU Zhenshu, WANG Wenwei. Can Green Finance Promote the “Virtual-to-Real” Transition: Evidence from Green Finance Reform and Innovation Pilot Zones. Journal of Financial Research, 2025, 546(12): 20-38.
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