Green finance reform and reshaping firm-banking relationships: Evidence from China

Abstract

This study examines how policy-driven green finance reform reshapes firm-banking relationships, using the implementation of China's Green Finance Pilot Zones (GFPZ) as a quasi-natural experiment. Employing loan announcement data from listed firms and a difference-indifferences approach, we measure the intensity of firm-banking relationships using repeated borrowing activity and find that the GFPZ policy significantly reduces it. The effect is more pronounced in regions with greater banking competition and financial development, and among firms that are more transparent or under stricter environmental scrutiny. By showing how sustainability-oriented policies transform financial relationships, this study provides new insights into the adaptation of firm-banking interactions under green development agendas.