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China’s experience in developing green finance to reduce carbon emissions: from spatial econometric model evidence

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Abstract

The objective of this study is to attempt to assess the effect of green finance in reducing carbon emissions in China, analyze the transformative role of policy impact in the development of green finance markets, and investigate the impact mechanisms of how green finance affects carbon dioxide emissions. Our time frame from 2007 to 2018 is selected for the empirical study by integrating the availability of data due to the scarcity of relevant statistics in the early days of green finance. Location of this study is in China where 30 provinces are included, excluding Tibet due to severe data shortage. As for methodology, we construct a green finance evaluation index system containing five indicators by entropy weight method, choose dynamic spatial Durbin model (DSDM) for empirical research, and perform mechanism analysis of restructuring industry and greening technology as intermediary channel. Our findings demonstrate that green finance in China does significantly reduce carbon emissions, and its spatial spillover effect and long-term effect are also verified. Furthermore, green finance tends to reduce CO2 emissions through restructuring industry and greening technology. Correspondingly, policy implications are recommended. First, improving green financial market and strengthening information disclosure of green financial market are crucial to facilitate green finance development. Local governments formulate carbon emission reduction strategies focusing on space by joint conference or coordination mechanism like river head system. Lastly, a mechanism should be developed to strengthen the transformation of industrial structure and to promote greening technology.

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Data availability

The datasets used and/or analyzed during the current study are available from the corresponding author on reasonable request.

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Authors and Affiliations

  1. Business School, University of Jinan, Nr. 336 Nanxinzhuangxi Road, Jinan, 250022, Shandong, China

    Ziqiang Lin & Xianchun Liao

  2. Institute of Green Development, University of Jinan, Nr. 336 Nanxinzhuangxi Road, Jinan, 250022, Shandong, China

    Xianchun Liao

  3. Research Center for Shandong Longshan Green Economy, University of Jinan, Nr. 336 Nanxinzhuangxi Road, Jinan, 250022, Shandong, China

    Xianchun Liao

  4. School of Public Affairs, Xiamen University, Xiamen, China

    Yuexia Yang

Authors
  1. Ziqiang Lin
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  2. Xianchun Liao
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Contributions

Conceptualization: Ziqiang Lin, Xianchun Liao.

Data curation: Ziqiang Lin.

Formal analysis and investigation: Ziqiang Lin, Xianchun Liao.

Methodology: Ziqiang Lin, Xianchun Liao.

Visualization: Ziqiang Lin.

Writing-original draft preparation: Ziqiang Lin.

Validation: Ziqiang Lin, Xianchun Liao.

Modification suggestions: Xianchun Liao, Yuexia Yang.

Language polish: Yuexia Yang, Xianchun Liao.

Writing-review and editing: Xianchun Liao.

All authors read and approved the final manuscript.

Corresponding author

Correspondence to Xianchun Liao.

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Lin, Z., Liao, X. & Yang, Y. China’s experience in developing green finance to reduce carbon emissions: from spatial econometric model evidence. Environ Sci Pollut Res 30, 15531–15547 (2023). https://doi.org/10.1007/s11356-022-23246-8

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