The impact of green finance on common prosperity and its spatial spillover effects

Green finance is a crucial force in advancing common prosperity. Based on panel data from 30 Chinese provinces (municipalities directly under the Central Government and autonomous regions) spanning 2011 to 2023, this paper measures the indices of common prosperity and green finance. Utilizing a mediating effect model and a spatial effect model, the study investigates the direct impact, spatial spillover effects, and mechanisms of green finance on common prosperity. The findings reveal that green finance significantly enhances the level of common prosperity, and this conclusion remains robust after a series of robustness and endogeneity tests. Spatial effect analysis indicates that under different spatial weight matrices, the effect of green finance on common prosperity is significantly positive; it not only promotes the level of common prosperity in the local region but also exerts a positive spillover effect on neighboring areas. Mechanism analysis demonstrates that green technology innovation and the degree of environmental regulation serve as important channels through which green finance facilitates common prosperity. Heterogeneity analysis suggests that the driving effect of green finance on common prosperity is more pronounced in the eastern regions and in regions with strong environmental governance. Therefore, it is imperative to continue optimizing the role of green finance in supporting the development of common prosperity, strengthen cross-regional exchange and cooperation regarding green financial resources, and provide financial guarantees for achieving the goal of common prosperity.