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Green financing the future: How smart cities transform China's carbon emissions landscape

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  • Wang, Fei
  • Guan, Guofeng
  • Wang, Qi

Abstract

The smart city initiative is crucial for achieving China's “dual-carbon” targets. Using panel data from 277 Chinese prefecture-level cities (2009–2022), this study investigates the impact of smart city policies on urban carbon emission intensity, emphasizing the intermediary role of green finance. Employing the entropy method to construct a comprehensive green finance indicator and adopting a Propensity Score Matching–Difference-in-Differences (PSM-DID) model, the empirical analysis reveals that smart city policies significantly reduce carbon emission intensity, with effects robust over time. Mechanism tests further demonstrate that green finance serves as a vital mediator, amplifying policy effects by fostering urban green transformation. The findings yield targeted policy implications to guide China's urban sustainability efforts effectively.

Suggested Citation

  • Wang, Fei & Guan, Guofeng & Wang, Qi, 2026. "Green financing the future: How smart cities transform China's carbon emissions landscape," International Review of Economics & Finance, Elsevier, vol. 105(C).
    • Handle: RePEc:eee:reveco:v:105:y:2026:i:c:s1059056025009864
    DOI: 10.1016/j.iref.2025.104823
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