Do Green Bonds Deliver? Green Innovation, Financing Constraints, and High-Quality Development Among Chinese A-Share Listed Firms

Every dollar directed toward green finance carries a promise, but does it deliver? This study tests whether corporate green bond issuance translates into measurable improvements in firm-level high-quality development, which is defined as the enhancement of firms’ sustainable growth capacity and resource allocation efficiency and is proxied by total factor productivity (TFP), a widely adopted indicator of development quality in the economics literature. Using panel data from Shanghai and Shenzhen A-share listed enterprises over 2014–2024, we employ a multi-period difference-in-differences framework, validated by parallel trend and placebo tests, to identify the causal effect of green bond issuance. Results confirm a significant positive impact, with green bond issuance raising firm TFP by 0.240 units, representing a substantial improvement in firms’ productivity performance relative to the sample average, robust across Olley–Pakes, Levinsohn–Petrin, and propensity score matched specifications. Mechanism analysis identifies three transmission channels: green technological innovation and green management practices operate as partial mediators, while financing constraints serve as a mediator. Heterogeneity tests reveal stronger effects among firms with higher agency costs, heavier pollution burdens, and those located in eastern China’s more marketized regions. By uncovering the productivity-enhancing mechanisms of green bond issuance, this study enriches the literature on sustainable finance and corporate high-quality development and provides new firm-level evidence on the economic consequences of green financial instruments. These findings provide micro-level evidence that green finance generates tangible productivity gains beyond signaling, offering actionable guidance for policymakers advancing sustainable corporate development under China’s dual carbon targets.