Unlocking sustainable growth: exploring the catalytic role of green finance in firms' green total factor productivity.

Promoting the development of green finance (GF) is a critical way to address the environmental and developmental problems in China. While existing studies have examined the macroscopic role of GF, few pay attention to its impact on micro-enterprises. To investigate the effect of GF on micro-enterprises, this study considers green credit as a quasi-natural experiment to investigate the effect on firms' green total factor productivity (GTFP). We use the SBM-Malmquist method to measure firms' GTFP and adopt the double dual machine learning approach to explore its impact and potential mechanisms. The findings indicate that (1) the GF can effectively promote the GTFP at the firm level, which has been reconfirmed by robustness tests. (2) The GF can improve firms' GTFP through three pathways: promoting firms' green innovation, alleviating financing constraints, and strengthening managers' environmental concerns. (3). The heterogeneity analysis verifies that state-owned enterprises and large-size firms are more sensitive to the response of green finance. The results of this study lend support to the establishment of green finance and the formulation of corporate green development strategies.