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The influencing mechanism of financial development on CO2 emissions in China: double moderating effect of technological innovation and fossil energy dependence

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Abstract

It has been a crucial challenge for countries worldwide to reduce carbon dioxide (CO2) emissions. China is developing policies among various industries to peak CO2 emissions as soon as possible and expects the reduction of CO2 emissions through financial development. This paper explores the influencing mechanism of financial development on CO2 emissions based on panel data from provinces in China, considering constraints of technological innovation and fossil energy dependence among provinces and periods. Empirical results consistently indicate that the effect of China's financial development on CO2 emissions per capita is significantly negative, and it also presents an inverted U-shaped pattern. In those provinces or periods witnessing lower technological innovation and higher fossil energy dependence, the financial development has more significant effect on carbon emission reduction. This result suggests that regions with deficiencies in the development of technology industries, lower proportions of the tertiary industry, and a higher percentage of the secondary industry need to focus more on the value of financial development.

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Data availability

https://doi.org/10.7910/DVN/J6Q5NP, Harvard Dataverse.

Notes

  1. https://www.unenvironment.org/emissions-gap-report-2020.

  2. Representing provinces, municipalities, and autonomous regions in China; these first-level administrative jurisdictions will subsequently be collectively referred to “regions” in the following.

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Funding

The work is supported by National Social Science Fund (ID: 20AZZ002), Beijing Social Science Fund (ID: 21GLA013).

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Author notes

  1. Feng Xiong, Leizhen Zang, David Feng, Jinhua Chen have contributed equally to this work.

Authors and Affiliations

  1. School of Economics and Management, Chongqing University of Posts and Telecommunications, Chongqing, China

    Feng Xiong

  2. The College of Humanities and Development Studies, China Agricultural University, No.2 Yuanmingyuan West Road, Beijing, 100193, China

    Leizhen Zang & David Feng

  3. Institute of State Governance Studies, Peking University, Beijing, China

    Leizhen Zang

  4. The Institute of Regional Governance, Soochow University, Suzhou, China

    Jinhua Chen

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  1. Feng Xiong
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  2. Leizhen Zang
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  4. Jinhua Chen
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Correspondence to Leizhen Zang or Jinhua Chen.

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Xiong, F., Zang, L., Feng, D. et al. The influencing mechanism of financial development on CO2 emissions in China: double moderating effect of technological innovation and fossil energy dependence. Environ Dev Sustain 25, 4911–4933 (2023). https://doi.org/10.1007/s10668-022-02250-5

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