IDEAS home Printed from https://ideas.repec.org/a/eee/lauspo/v166y2026ics0264837726001122.html

How green finance drives urban land green use efficiency: Evidence and lessons from China

Author

Listed:
  • Sun, Le
  • Li, Huan

Abstract

Enhancing Urban Land Green Use Efficiency (LGUE) is a crucial global objective to decouple economic activity from environmental degradation. Green Finance (GF) has emerged internationally as a promising instrument for this transition. However, a critical knowledge gap persists regarding the specific mechanisms of its impact and, more importantly, the local contextual factors that determine its effectiveness. Based on comprehensive panel data of 285 prefecture-level cities in China from 2008 to 2021, this study empirically analyzes the relationship between GF and LGUE. Findings confirm that the policy significantly enhances LGUE, primarily mediated by increased government environmental attention and industrial structure upgrading. Crucially, our heterogeneity analysis reveals that GF's success is not universal but is profoundly shaped by institutional fit. Its impact is strong in small, mountainous, and resource-based cities poised for transition but is weak or even negative in large cities and old industrial bases facing institutional friction and path dependency. By systematically unpacking these varied outcomes, this paper provides a robust framework of context-dependency, offering critical and generalizable lessons for designing effective climate finance policies globally.

Suggested Citation

  • Sun, Le & Li, Huan, 2026. "How green finance drives urban land green use efficiency: Evidence and lessons from China," Land Use Policy, Elsevier, vol. 166(C).
    • Handle: RePEc:eee:lauspo:v:166:y:2026:i:c:s0264837726001122
    DOI: 10.1016/j.landusepol.2026.108028
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0264837726001122
    Download Restriction: Full text may be restricted for ScienceDirect subscribers
    File URL: https://libkey.io/10.1016/j.landusepol.2026.108028?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Yang, Zhijiu & Ding, Hai & Zhu, Wenbo, 2024. "Environmental regulation and land resource allocation in China: Empirical evidence from micro-level land transaction data," Land Use Policy, Elsevier, vol. 140(C).
    2. Koroso, Nesru H. & Zevenbergen, Jaap A. & Lengoiboni, Monica, 2020. "Urban land use efficiency in Ethiopia: An assessment of urban land use sustainability in Addis Ababa," Land Use Policy, Elsevier, vol. 99(C).
    3. Yang, Jidong & Liu, Cheng & Liu, Kai, 2023. "Land marketization and industrial restructuring in China," Land Use Policy, Elsevier, vol. 131(C).
    4. T. S. Breusch & A. R. Pagan, 1980. "The Lagrange Multiplier Test and its Applications to Model Specification in Econometrics," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 47(1), pages 239-253.
    5. Tolliver, Clarence & Keeley, Alexander Ryota & Managi, Shunsuke, 2020. "Policy targets behind green bonds for renewable energy: Do climate commitments matter?," Technological Forecasting and Social Change, Elsevier, vol. 157(C).
    6. Geddes, Anna & Schmidt, Tobias S., 2020. "Integrating finance into the multi-level perspective: Technology niche-finance regime interactions and financial policy interventions," Research Policy, Elsevier, vol. 49(6).
    7. Tone, Kaoru & Tsutsui, Miki, 2010. "An epsilon-based measure of efficiency in DEA - A third pole of technical efficiency," European Journal of Operational Research, Elsevier, vol. 207(3), pages 1554-1563, December.
    8. Menzori, Ivan Damasco & de Sousa, Isabel Cristina Nunes & Gonçalves, Luciana Márcia, 2025. "From territorial governance to land value realities: The mediating role of master plan implementation within urban growth dynamics," Land Use Policy, Elsevier, vol. 158(C).
    9. Kassi, Diby Francois & Li, Yao, 2025. "Does green financing benefit the development of renewable energy capacities and environmental quality? Evidence from Chinese provinces," Renewable Energy, Elsevier, vol. 242(C).
    10. Hossain, Mohammad Razib & Rao, Amar & Sharma, Gagan Deep & Dev, Dhairya & Kharbanda, Aeshna, 2024. "Empowering energy transition: Green innovation, digital finance, and the path to sustainable prosperity through green finance initiatives," Energy Economics, Elsevier, vol. 136(C).
    11. John Bistline & Geoffrey Blanford & Maxwell Brown & Dallas Burtraw & Maya Domeshek & Jamil Farbes & Allen Fawcett & Anne Hamilton & Jesse Jenkins & Ryan Jones & Ben King & Hannah Kolus & John Larsen &, 2023. "Emissions and Energy Impacts of the Inflation Reduction Act," Papers 2307.01443, arXiv.org.
    12. Lewis, Joanna I., 2010. "The evolving role of carbon finance in promoting renewable energy development in China," Energy Policy, Elsevier, vol. 38(6), pages 2875-2886, June.
    13. Hanif, Muhammad Wasif & Zheng, Sun, 2025. "Assessing the economic impact of green finance and renewable energy use on environmental sustainability in high-polluting sectors," Renewable Energy, Elsevier, vol. 247(C).
    14. Abubakar, Ismaila Rimi, 2021. "Predictors of inequalities in land ownership among Nigerian households: Implications for sustainable development," Land Use Policy, Elsevier, vol. 101(C).
    15. Xu, Weixiang & Guo, Jiaxin & Zhou, Jianping, 2025. "Impact of digital governance on the green utilization efficiency of urban land," Land Use Policy, Elsevier, vol. 153(C).
    16. Beladi, Hamid & Chao, Chi-Chur & Trinh, Cong Tam & Ee, Mong Shan, 2025. "Green financing for ESG investments and wages in a sustainable economy," International Review of Financial Analysis, Elsevier, vol. 106(C).
    17. Farhad Taghizadeh-Hesary & Abdulrasheed Zakari & Rafael Alvarado & Vincent Tawiah, 2022. "The green bond market and its use for energy efficiency finance in Africa," China Finance Review International, Emerald Group Publishing Limited, vol. 12(2), pages 241-260, March.
    18. Ashford, Nicholas A. & Hall, Ralph P., 2018. "Achieving Global Climate and Environmental Goals by Governmental Regulatory Targeting," Ecological Economics, Elsevier, vol. 152(C), pages 246-259.
    19. Liu, Sheng & Wang, Yukai, 2023. "Green innovation effect of pilot zones for green finance reform: Evidence of quasi natural experiment," Technological Forecasting and Social Change, Elsevier, vol. 186(PA).
    20. Guillermo Arévalo & Maximiliano González & Alexander Guzmán & María-Andrea Trujillo, 2024. "The value effect of sustainability: evidence from Latin American ESG bond market," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 14(3), pages 516-537, July.
    21. Page, Jessica & Zhou, Hong & Pan, Haozhi & Zhou, Chang & Pei, Pei & Kalantari, Zahra, 2024. "(Non-)terrestrial and (Non-)local pathways of behavioral policy diffusion in European cities’ climate action plans: Contextual, cultural, and leadership framing," Land Use Policy, Elsevier, vol. 147(C).
    22. Mirko Draca & Stephen Machin & John Van Reenen, 2011. "Minimum Wages and Firm Profitability," American Economic Journal: Applied Economics, American Economic Association, vol. 3(1), pages 129-151, January.
    23. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
    24. Kissinger, Gabrielle & Gupta, Aarti & Mulder, Ivo & Unterstell, Natalie, 2019. "Climate financing needs in the land sector under the Paris Agreement: An assessment of developing country perspectives," Land Use Policy, Elsevier, vol. 83(C), pages 256-269.
    25. Walid Oueslati & Seraphim Alvanides & Guy Garrod, 2015. "Determinants of urban sprawl in European cities," Urban Studies, Urban Studies Journal Limited, vol. 52(9), pages 1594-1614, July.
    26. Lee, Chien-Chiang & Yuan, Zihao & Kang, Yongchao, 2024. "Green finance and land ecological security: A potential mechanism for sustainable development," Economic Analysis and Policy, Elsevier, vol. 84(C), pages 1222-1241.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Anis Omri & Fadhila Hamza & Sana Slimani, 2025. "The Role of Green Finance in Driving Artificial Intelligence and Renewable Energy for Sustainable Development," Sustainable Development, John Wiley & Sons, Ltd., vol. 33(5), pages 6844-6870, October.
    2. Pan, Chenxin & Chen, Jie, 2026. "The impact of land redevelopment on industrial structure upgrading in the context of urban regeneration," Land Use Policy, Elsevier, vol. 166(C).
    3. Shoaib Khan & Tahir Akhtar & Ameen Qasem, 2024. "Dynamics of capital structure determinants: empirical evidence from GCC countries," Future Business Journal, Springer, vol. 10(1), pages 1-18, December.
    4. Daniel Kouloukoui & Ângelo Marcio Oliveira Sant'Anna & Sônia Maria da Silva Gomes & Marcia Mara de Oliveira Marinho & Pieter de Jong & Asher Kiperstok & Ednildo Andrade Torres, 2019. "Factors influencing the level of environmental disclosures in sustainability reports: Case of climate risk disclosure by Brazilian companies," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 26(4), pages 791-804, July.
    5. Li, Lu & Gan, Yufei & Bi, Shuochen & Fu, Haokai, 2025. "Substantive or strategic? Unveiling the green innovation effects of pilot policy promoting the integration of technology and finance," International Review of Financial Analysis, Elsevier, vol. 97(C).
    6. Zhen Deng & Fan Xiao & Jing Huang & Yizhen Zhang & Fang Zhang, 2024. "Spillover Effects of Urban Expansion on Land Green Use Efficiency: An Empirical Study Based on Multi-Source Remote Sensing Data in China," Land, MDPI, vol. 13(7), pages 1-21, July.
    7. Wang, Chao-Hung, 2014. "How relational capital mediates the effect of corporate reputation on competitive advantage: Evidence from Taiwan high-tech industry," Technological Forecasting and Social Change, Elsevier, vol. 82(C), pages 167-176.
    8. Jing, Ruifeng & Xu, Yanmei & Liu, Ruizhi, 2025. "Data element, big data and enterprise innovation: Evidence from data trading platforms and national big data comprehensive pilot zones," International Review of Financial Analysis, Elsevier, vol. 105(C).
    9. Goodell, John W. & Goyal, Abhinav, 2018. "What determines debt structure in emerging markets: Transaction costs or public monitoring?," International Review of Financial Analysis, Elsevier, vol. 55(C), pages 184-195.
    10. Ghazouani, Tarek & Mhaidi, Marwa, 2026. "Does green finance moderate the impact of geopolitical risk on environmental sustainability? Evidence from G7 economies," Research in International Business and Finance, Elsevier, vol. 89(C).
    11. Wu, Di & Bao, Yuxiang & Wang, Huizong & Zhang, Fengbing, 2026. "The impact of place-based policy on agricultural green total factor productivity: Evidence from China," Economic Analysis and Policy, Elsevier, vol. 89(C), pages 287-305.
    12. Kushawaha, Deepak & Jain, Manisha, 2024. "Debt as catalyst: Empowering renewable energy in developing countries," Energy Policy, Elsevier, vol. 194(C).
    13. Wu, Yan & Sun, Hongmin & Zhang, Lixia & Cui, Can, 2025. "Green investment and quality of economic development: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 103(C).
    14. Tiwari, Aviral Kumar & Aikins Abakah, Emmanuel Joel & Gabauer, David & Dwumfour, Richard Adjei, 2022. "Dynamic spillover effects among green bond, renewable energy stocks and carbon markets during COVID-19 pandemic: Implications for hedging and investments strategies," Global Finance Journal, Elsevier, vol. 51(C).
    15. Abdulnasser Hatemi-J, 2020. "Asymmetric Panel Causality Tests with an Application to the Impact of Fiscal Policy on Economic Performance in Scandinavia," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 73(3), pages 389-404.
    16. Xing, Chao & Zhang, Yuming & Tripe, David, 2021. "Green credit policy and corporate access to bank loans in China: The role of environmental disclosure and green innovation," International Review of Financial Analysis, Elsevier, vol. 77(C).
    17. Xinyan Xu & Jieyu Li & Jianming Zheng, 2025. "China’s Industry–Finance Collaboration Pilot in Stimulating Corporate Green Innovation," Sustainability, MDPI, vol. 17(10), pages 1-25, May.
    18. Zhang, Cong & Farooq, Umar & Jamali, Dima & Alam, Mohammad Mahtab, 2024. "The role of ESG performance in the nexus between economic policy uncertainty and corporate investment," Research in International Business and Finance, Elsevier, vol. 70(PB).
    19. Chen, Qianqian, 2024. "From concept to capital: Investigating the influence of green innovation on equity financing in BRICS economies," International Review of Financial Analysis, Elsevier, vol. 93(C).
    20. Zou, Caifeng & Zhang, Chuan, 2026. "The capital allocation effect of green finance: Evidence from corporate technological investment," International Review of Financial Analysis, Elsevier, vol. 110(C).

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:lauspo:v:166:y:2026:i:c:s0264837726001122. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joice Jiang (email available below). General contact details of provider: https://www.journals.elsevier.com/land-use-policy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.