How Does Green Finance Mitigate Corporate Climate Risk? Evidence From a Quasi-Natural Experiment

This study examines how green finance policy (GFP) reduces corporate climate risk (CCR). Drawing on institutional and signaling theories, we leverage China’s Green Finance Pilot Zone policy as a quasi-natural experiment. Using a staggered difference-in-differences framework on panel data from 3,845 listed companies (2010–2023), we find that GFP significantly mitigates CCR. Mechanism analysis provides evidence consistent with the proposed roles of alleviating financing constraints and attracting green investors. Furthermore, the mitigation is more pronounced in non-heavy-polluting firms and regions with advanced financial development. Addressing broader policy implications, our findings suggest that to foster corporate climate resilience, policymakers should expand green financial infrastructure, incentivize green investments, and tailor environmental regulations to regional financial capacities and industrial characteristics.