Does Green Innovation Alleviate or Aggravate Financing Constraints? — Uncovering a Nonlinear Threshold Effect: Evidence from Chinese Listed Firms

Abstract

Green innovation has been a highly debated topic, which is increasingly important for market entities, especially firms and policy makers. Nevertheless, the advancement of green innovation is constrained by its inherent characteristics: high upfront investment, long payback periods, and substantial risks. This paper selects Chinese A-share listed companies from 2015 to 2024 as the initial research sample, and elaborates on the nonlinear relationship between corporate green innovation (measured by green patent counts) and financing constraints represented by the SA index, filling the research gap in existing relevant studies and providing solid empirical evidence to support the formulation, implementation and optimization of green innovation supporting policies. Using panel data, fixed-effects models, and heterogeneity tests, this study examines the inverted U-shaped relationship between green innovation and financing constraints. The findings offer empirical clarification on how green innovation alleviates financing constraints, and carry meaningful implications for stimulating market vitality and advancing high-quality green transformation.