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How can green finance enhance urban ecological resilience? Dual evidence from theoretical modeling and empirical tests

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  • Li, Shuoshuo
  • Zheng, Junhui
  • Lee, Chien-Chiang

Abstract

Global climate change has heightened ecological risks in urban areas, making urban ecological resilience (UER) a key pathway to achieving the Sustainable Development Goals (SDGs). This study develops a theoretical economic growth model integrating green finance (GF) and UER and empirically examines their relationship using panel data for Chinese cities from 2006 to 2022. The results indicate that a 1 % increase in GF is associated with a 0.019-point rise in UER, which is significant at the 1 % level, and this relationship remains robust across multiple empirical specifications. Mechanism analysis shows that GF enhances UER primarily through green technology innovation, green total factor productivity, and green total factor energy efficiency. Heterogeneity analysis further reveals that the effect is more pronounced in Eastern and Central China, in pilot zones for green finance reform and innovations, and in non-smart cities. These findings highlight the stabilizing role of GF in fostering UER and suggest that expanding green credit and bond markets, integrating green growth with smart city development, and tailoring region-specific policies can jointly support climate adaptation and the SDGs.

Suggested Citation

  • Li, Shuoshuo & Zheng, Junhui & Lee, Chien-Chiang, 2026. "How can green finance enhance urban ecological resilience? Dual evidence from theoretical modeling and empirical tests," Economic Analysis and Policy, Elsevier, vol. 89(C), pages 196-213.
    • Handle: RePEc:eee:ecanpo:v:89:y:2026:i:c:p:196-213
    DOI: 10.1016/j.eap.2025.11.029
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