The unintended effects of green finance development on corporate credit risk: a dual-channel analysis of financing and investment

Green finance, as a core market-oriented tool linking financial resource allocation and ecological transformation, has delivered remarkable environmental benefits in China. However, the capital reallocation driven by ecological transition goals may trigger micro-level economic feedback and affect firms’ adaptive capacity amid transition. Using panel data of Chinese listed manufacturing firms from 2010 to 2024, this paper explores how green finance development affects corporate credit risk. The empirical results reveal that green finance elevates manufacturing firms’ credit risk via two channels: the financing volatility effect and the over-incentive effect. Further heterogeneity analysis reveals that the risk-amplifying effect is more pronounced in firms with poor environmental information disclosure, enterprises in capital-intensive and technology-intensive industries, firms with low external market attention, and enterprises located in low-human-capital regions, reflecting the differentiated adaptation capacity of micro entities under ecological transition. In addition, higher financial slack and mature regional technology markets can effectively mitigate the risk-amplifying effect of green finance, which helps to enhance firms’ resilience in the process of ecological transition. These findings enrich the micro-level evidence of the interaction between financial dynamics and ecosystems, and provide empirical support and decision-making references for balancing ecological transition goals and microeconomic stability, and designing green financial policies that coordinate sustainable development and risk prevention.