Complementary and substitution effects of digital finance and green finance on corporate green innovation

Against the backdrop of the “dual-carbon” goals, traditional financial models are unable to meet the urgent demands of green economic development. The coordinated development of digital finance and green finance has become a critical issue of the times. Existing research has focused more on the independent impacts of digital finance and green finance, while paying insufficient attention to their interactive effects and underlying mechanisms. Therefore, this study examines the green innovation incentive effects of digital finance and green finance, as well as their interactive relationship and underlying mechanisms, by constructing a two-way fixed effects model and applying Logit and Poisson nonlinear models. The analysis is based on data from Chinese A-share listed companies from 2011 to 2023. Research indicates that digital finance and green finance exhibit a stronger substitution effect than a complementary effect in incentivizing strategic green innovation. After testing the nonlinear model, the aforementioned conclusions remain valid. The substitution effect between digital finance and green finance is primarily concentrated in non-high-tech industries, heavily polluting industries, non-state-owned enterprises, and lower-tier cities. When corporate financing constraints are weaker, the substitution effect between digital finance and green finance becomes more pronounced. The stronger a company’s technological absorption capacity, the weaker the substitution effect between digital finance and green finance becomes. The conclusion provides empirical evidence and decision-making support for leveraging diverse financial models to promote green development and sustainable growth.