Does green finance reform spur corporate AI innovation? evidence from China

As the economic green transition increasingly relies on frontier digital technologies, whether green finance reform can stimulate corporate artificial intelligence (AI) innovation (CAII) has become an important yet underexplored question. Using China’s Green Finance Reform and Innovation Pilot Zones (GFRIPZ) as a policy shock, we estimate a difference-in-differences model using data from Chinese listed firms over the 2014–2024 period and find that firms exposed to the pilot-zone reform exhibit significantly higher AI innovation. This result remains robust to multiple tests, and heterogeneity analysis shows that the statistical significance of the GFRIPZ effect on CAII is mainly driven by highly financially constrained firms and high-tech firms. The positive effect of the GFRIPZ on CAII is consistent with a credit availability channel, and analyst attention positively moderates the effect of the GFRIPZ on CAII. Our findings extend the literature on green finance reform by showing that it affects not only green outcomes in a narrow sense, but also risky frontier digital innovation within firms.