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Green finance reform, environmental regulation, and regional green and low-carbon development

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  • Yang, Bingqing
  • Liu, Yue

Abstract

This paper examines the impact of green finance policies on carbon emission intensity and its underlying mechanisms, using the 2017 establishment of green finance reform and innovation pilot zones as an exogenous shock and employing a difference-in-differences (DID) approach. The study demonstrates that the pilot zone policies significantly reduced carbon emission intensity in pilot regions by constructing a dual environmental regulation framework combining "policy incentives and market constraints." Mediation effect tests further reveal that strengthened environmental regulation and green technological innovation constitute the core pathways through which policies exert carbon reduction effects. Heterogeneity analysis indicates that policy outcomes are more pronounced in regions with higher levels of financial development, highlighting the critical role of regional financial infrastructure in aligning with policy effectiveness.

Suggested Citation

  • Yang, Bingqing & Liu, Yue, 2025. "Green finance reform, environmental regulation, and regional green and low-carbon development," Finance Research Letters, Elsevier, vol. 85(PC).
    • Handle: RePEc:eee:finlet:v:85:y:2025:i:pc:s1544612325013613
    DOI: 10.1016/j.frl.2025.108104
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