Green finance policy instrument mix and firms' environmental innovation: Does firm life‐cycle stage matter?

Many countries around the world have introduced green finance policies to promote environmental innovation activities. Based on institutional theory and life‐cycle theory, this study constructs a model among green finance, life cycle, and firms' environmental innovation. The research sample consists of 558 Shanghai and Shenzhen A‐share manufacturing listed firms from 2010 to 2021. Using multiple regression analysis, this study examines the influences of green credit, green bonds, and the mix of the two on firms' environmental innovation and the moderating role of the firm life cycle. The results indicate that green credit, green bonds, and the mix of the two have positive effects on firms' environmental innovation. Green bonds and the mix of green credit and green bonds have stronger positive effects on firms' environmental innovation in the growth stage than in the maturity and recession stages. By introducing firms' life‐cycle theory, this study reveals the mechanism between green financial policy and firms' environmental innovation, and provides a reference for optimizing combinations of green financial policy measures to promote the development of firms' environmental innovation activities.