R&D and environmentally induced innovation: Does financial constraint play a facilitating role?

The improvement of sustainable economic growth is a necessity. One issue facing policymakers is facilitating green innovation. This paper constructs a model and explores the relationship between R&D expenditures and green patents, and investigates the impact of financial constraints on green innovation output. Based on the theoretical model assumptions and the data of listed companies in China from 2007 to 2019, this paper draws the following conclusions after the empirical tests: First, R&D expenditure is significant and drives green innovation as measured by green patents. Second, contrary to the positive relationship between R&D expenditure and green patents, financial constraints discourage green innovation. Third, financial constraints facilitate R&D investment efficiency, which results in enhancing the positive effect of R&D on green innovation.