The Polarization Effect and Mechanism of China’s Green Finance Policy on Green Technology Innovation

The advancement of green technology innovation (GTI) is crucial for facilitating development. China, the largest carbon-emitting economy, should prioritize acceleration GTI to augment global economic growth and reduce carbon emissions. Green finance policy (GFP) a common instrument encouraging enterprises develop GTI. This study, therefore, takes pilot China’s Finance Reform Innovation Pilot Zone as “quasi-natural experiment” uses difference-in-differences method explore impact mechanism GFP on Chinese enterprises’ Based empirical analysis using microdata from industrial 2015 2021, following conclusions can be drawn. First, has polarization effect. It facilitates development in while hindering progress polluting enterprises. Second, enhances by promoting innovative behaviors factor allocation optimization behaviors. However, reduces pollution non-innovative investments reducing efficiency optimization. Third, combination policies utilizing GFP, environmental subsidy, R&D subsidy effectively increase without compromising study offers evidence recommendations establishing system developing countries.