Energy-derivatives market development and corporate green innovation: evidence from the launch of Shanghai crude oil futures

Green innovation is crucial for sustainable corporate development; however, existing literature provides limited insight into how energy-derivatives market development (EDMD) affects corporate green innovation behaviour. Using the official launch of the Shanghai crude oil futures contract as an exogenous shock, this study investigates whether EDMD enhances Chinese corporate green innovation. Using a panel of A-share listed firms from 2013 to 2023 (comprising 22,179 firm-year observations) and a continuous difference-in-differences (DID) design, this study has found that the introduction of crude oil futures in China significantly elevates corporate green innovation levels. This result was robust to a battery of checks. The mechanism analysis revealed that EDMD promoted green innovation by alleviating financial constraints. Managerial myopia and heightened information asymmetry attenuate this positive relationship. Heterogeneity analyses have indicated that the promoting effect is more pronounced among state-owned enterprises, highly polluting firms, and firms in which the roles of the CEO and board chairs are separated. Overall, this study provides micro-level empirical evidence of the nexus between EDMD and corporate green innovation and offers relevant insights into the design of energy policies.