Does Green Finance Promote Green Innovation Among Construction Firms? A Quasi-Natural Experiment from China

Against a backdrop of tightening environmental regulations and escalating climate-related risks, the construction sector faces mounting pressure to improve both its sustainability performance and long-term resilience. As a market-oriented institutional tool, green finance policy has been widely identified as a pivotal lever for advancing corporate green innovation; nevertheless, its causal impact on green innovation in construction enterprises—an essential foundation for sustained industry resilience—has Iyet to be fully examined in empirical research. Capitalizing on the exogenous variation introduced by China’s Green Finance Reform and Innovation Pilot Zone (GFRIPZ) initiative, this study investigates 105 construction enterprises listed on the Chinese stock market from 2010 to 2020. Employing a Difference-in-Differences (DiD) estimation strategy, we find that the GFRIPZ initiative significantly boosts green innovation among construction enterprises. This positive association persists after a series of robustness assessments. Channel analysis identifies financing conditions as a key pathway linking the GFRIPZ initiative to green innovation. Reduced financing frictions allow construction enterprises to increase investment in environmentally oriented technological activities. Additional sub-sample analysis corroborates that the GFRIPZ policy exerts a far more salient innovation incentive effect on non-state-owned construction firms, which aligns with the stronger impetus for in-house R&D under competitive market conditions. These findings offer empirical evidence that well-designed green finance policies can serve as effective institutional enablers of green innovation, thereby contributing to the sustainable resilience of the construction sector. The findings offer actionable guidance for regulators on incorporating financial instruments into governance frameworks that support sustainable construction.