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Green finance and environmental governance in river basin economies: Mechanism analysis based on green innovation and industrial upgrading in the Yangtze River region

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  • Ye, Jinfen
  • Wang, Yubo
  • Yang, Jiayan

Abstract

This study investigates the leverage effect of green finance on watershed governance in China's Yangtze River Economic Belt, focusing on the dual performance of environmental and economic outcomes. Employing panel data from 39 core cities between 2005 and 2023, the research confirms that green finance significantly enhances environmental governance performance. Mechanism analyses further indicate that green finance exerts its positive effects mainly by fostering green technological innovation and facilitating industrial structural upgrading. Additionally, the effectiveness of green finance is moderated by regional variations in technological capacity, financial development, and environmental regulatory intensity, exhibiting a notable nonlinear threshold effect—where its impact on environmental governance intensifies substantially once a certain level of industrial structural advancement is surpassed. The study suggests tailored regional strategies, strengthened support for green innovation, and accelerated rational upgrading of industrial structures to synergize high-quality economic development with ecological improvement.

Suggested Citation

  • Ye, Jinfen & Wang, Yubo & Yang, Jiayan, 2025. "Green finance and environmental governance in river basin economies: Mechanism analysis based on green innovation and industrial upgrading in the Yangtze River region," Finance Research Letters, Elsevier, vol. 86(PF).
    • Handle: RePEc:eee:finlet:v:86:y:2025:i:pf:s1544612325021257
    DOI: 10.1016/j.frl.2025.108872
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    References listed on IDEAS

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