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Financial Development and Environmental Regulations: The Two Pillars of Green Transformation in China

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  • Cong Li

    (School of Economics, Qingdao University, Qingdao 266071, China)

  • Xihua Liu

    (School of Economics, Qingdao University, Qingdao 266071, China)

  • Xue Bai

    (School of Economics, Qingdao University, Qingdao 266071, China)

  • Muhammad Umar

    (School of Economics, Qingdao University, Qingdao 266071, China)

Abstract

Awareness of the influence of environmental regulations and financial development on green technological progress by Chinese enterprises will help to promote the green transformation of China’s economy, thereby comprehensively enhancing the quality and competitiveness of its economic development. This paper constructs a theoretical framework to analyze environmental regulation, financial development, and green technological progress and studies the relationship among these three indicators using 2004–2018 data from Shandong province. The results show that environmental regulations and financial development both play roles in promoting green technological progress, but as environmental regulation becomes stronger, the effects of finance on green technological progress begin to differ across regions. The results partially verify the applicability of the Porter hypothesis in China, providing a reference for all levels of government to formulate scientific and reasonable environmental rules and policies.

Suggested Citation

  • Cong Li & Xihua Liu & Xue Bai & Muhammad Umar, 2020. "Financial Development and Environmental Regulations: The Two Pillars of Green Transformation in China," IJERPH, MDPI, vol. 17(24), pages 1-17, December.
    • Handle: RePEc:gam:jijerp:v:17:y:2020:i:24:p:9242-:d:459902
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    References listed on IDEAS

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