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Effect of green inclusive finance on carbon emission efficiency: Empirical evidence from provincial panel data in China

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  • Yao, Dingjun
  • Zhang, Yu
  • Hu, Jinzhan
  • Zhou, Hua

Abstract

Green finance and inclusive finance are critical to advancing the “dual‑carbon” strategy. However, green finance lacks enough inclusivity, and inclusive finance falls short on enough sustainability. Integrating the two is essential to jointly enhance carbon emission efficiency. Using sample data from 30 provinces in China between 2010 and 2021, this study employs the Super-SBM model to construct carbon emission efficiency indicators and the entropy weight-TOPSIS method to calculate the development level of green inclusive finance. A panel fixed-effects model examines the impact of green inclusive finance on carbon emission efficiency. The findings show that the development of green inclusive finance significantly improves carbon emission efficiency. This conclusion holds robust through tests such as lagging the explained variable by one period, changing the measurement of the explanatory variable, excluding the effects of epidemics, and eliminating extreme values. Mechanism tests reveal that green inclusive finance achieves this by optimizing the energy consumption structure and reducing mismatches in innovation resources. Heterogeneity analysis indicates that its impact is most pronounced in regions with lower environmental regulation, higher R&D expenditures, and greater financial autonomy. To maximize its potential, we recommend improving the green inclusive finance policy system, increasing support for green energy projects, optimizing the allocation of resources, and formulating region-specific policies. These measures are aimed toward achieving a win-win outcome, fostering economic growth and ecological sustainability.

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  • Yao, Dingjun & Zhang, Yu & Hu, Jinzhan & Zhou, Hua, 2025. "Effect of green inclusive finance on carbon emission efficiency: Empirical evidence from provincial panel data in China," International Review of Financial Analysis, Elsevier, vol. 106(C).
    • Handle: RePEc:eee:finana:v:106:y:2025:i:c:s1057521925005733
    DOI: 10.1016/j.irfa.2025.104486
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