Abundant literature infers the negative incidence of financial liberalization in the banking sector. As interest rate marketization is a reality in China, we empirically investigate the determinants of commercial banks’ financial performance using 10 listed Chinese commercial banks for 1999 to 2019. Our findings suggest that net interest margin (NIM), non-performing loans (NPL), and asset size (LnAsset) are the key drivers of profitability in Chinese banks. Interestingly, for the sample of city banks observed, we find that bank performance is strongly driven by sound management of the assets and the retail interest margins. On the opposite, the joint-stock banks’ strong diversification leads to lower reliance on net interest margins. Our results also suggest that joint-stock banks’ asset size puts strong pressure on their overall performance and exert a diminishing return effect as their assets’ critical size generates proportional administrative expenses that hinder profitability.

Purpose: This research examines the relationship between green innovation and firm performance, focusing on identifying the moderating effects of government subsidies and digital transformation R&D investments. The study aims to provide insights on how firms can leverage green innovation for enhanced performance while addressing potential drawbacks. Design/methodology/approach: This study adopts a mixed-methods approach, utilizing both analytical models and empirical analyses. It investigates the curvilinear relationship between green innovation and firm performance and explores the moderating roles of government subsidies and digital transformation R&D investments. Findings: The findings reveal an inverted U-shaped relationship between green innovation and firm performance, indicating that initial investments in green innovation led to performance improvements, but beyond a certain point, the returns diminished. The study also finds that government subsidies and digital transformation R&D investments significantly enhance the positive impact of green innovation up to the optimal threshold and help mitigate negative effects. Practical implications: The research provides practical guidance for firms on managing their green innovation investments to maximize performance benefits. It also offers insights for policymakers on designing effective subsidies and support mechanisms to promote environmental sustainability and economic growth. Originality/value: This study contributes to the literature by elucidating the complex relationship between green innovation and firm performance and highlighting the critical roles of government subsidies and digital transformation R&D investments. It offers valuable implications for businesses seeking to balance environmental and economic objectives and policymakers aiming to foster sustainable and profitable practices.

Undoubtedly, green total factor energy efficiency plays a pivotal role in achieving energy conservation, emission reduction, and green development goals. China mainly used command-based environmental regulation tools to enhance the green total factor energy efficiency in the early stage. Later, under the new trend of market-oriented reform, the Chinese government introduced market-oriented environmental regulation tools such as carbon rights. However, the effectiveness of market-oriented environmental regulation tools is still unclear. Therefore, this study investigates the impact of market-oriented environmental regulation tools on green total factor energy efficiency by using the data of 265 cities in China. For this purpose, yearly data from 2003 to 2017 are employed using the difference-in-difference method. The empirical results unveil that the emission trading system can significantly improve green all factor energy efficiency. In addition, the heterogeneity analysis shows that the emission trading system is conducive to improving energy efficiency in resource-based cities. Based on the results, this study provides policy enlightenment for market-oriented environmental regulation tools to promote green development according to the local conditions.