How does FinTech enable the expansion of green innovation boundaries: Evidence from the interventions of China's environmental protection tax law

Enhancing green innovation capacity is critical for sustainable development. While FinTech is often viewed as a catalyst for clean technology advancement, its impact on the quality and scope of green innovation remains underexplored. This study conceptualizes green innovation boundaries using firm-level clean technologies in new fields and examines whether FinTech alone or combined with market-based environmental policies serves as an optimal approach within the external enabler (EE) framework. Using a sample of Chinese listed firms, we find that FinTech alone does not expand green innovation boundaries. However, the combination of FinTech and China's Environmental Protection Tax Law (EPTL) significantly increases green innovation boundaries by about 1.7 % for every 1 % rise in city-level FinTech development post-EPTL implementation. Yet, this synergy misaligns with sustainable development objectives. Mechanism analysis reveals that the FinTech-EPTL combination improves knowledge accessibility via external ecopreneurship and alleviates financing constraints by enhancing credit structure, rather than lowering financing costs. The impact of this combination is more pronounced among firms with higher levels of digitalization, non-hometown CEOs, intense industry competition, and strong local intellectual property rights protection. By integrating internal evolution of clean technologies among incumbent firms and external ecopreneurship within the EE framework, this paper contributes to the refinement and expansion of the EE framework and provides valuable insights for policymakers regarding the optimal design of environmental policies.