Can macroprudential policy rail for green innovation? Evidence from Chinese energy enterprises

Prior studies mostly focus on financial cycles and risk control, yet limited attention has been paid to how macroprudential rules influence environmental technology development in the energy sector. Through examining panel data of Chinese A-share energy firms between 2000 and 2020, this study shows that implementing these regulations effectively stimulates eco-friendly innovations in energy companies, leading to improvements in both amount and standard of such developments. Research indicates that the rules’ effect on innovation quality remains moderate compared to its impact on quantity. The study reveals that such policies mainly work by limiting companies’ access to loans and making financing more difficult. Data analysis demonstrates that private companies and manufacturing-focused energy businesses show stronger responses to these rules. The research also confirms that while these regulations might decrease short-term profits, they help energy firms achieve better environmental, social and management outcomes. These findings provide useful information for creating better macroprudential frameworks that support environmental protection and carbon reduction goals in the energy industry.