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Do Green Finance and Environmental Regulation Play a Crucial Role in the Reduction of CO 2 Emissions? An Empirical Analysis of 126 Chinese Cities

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  • Fushuai Wang

    (School of Economics, Shandong University of Technology (SDUT), Zibo 255000, China)

  • Wenxia Cai

    (School of Economics, Shandong University of Technology (SDUT), Zibo 255000, China)

  • Ehsan Elahi

    (School of Economics, Shandong University of Technology (SDUT), Zibo 255000, China)

Abstract

Green finance and environmental regulation can reduce CO 2 emissions and promote the sustainability of economic development. Based on panel data of 126 resource-based prefecture-level cities in China from 2005 to 2017, the current study used a dynamic panel data model to empirically determine the CO 2 emission reduction effects of different green finance instruments under different environmental regulatory intensities. The results showed that green finance tools had significant negative effects on the intensity of CO 2 emissions, and green finance can adapt to environmental regulations of different intensities, which cooperated to promote carbon emission reduction. Moreover, in comparison, the debt-based green finance instrument had a stronger effect than the equity-based green finance instrument, and they did not show a coupling relationship. An administrative adjustment in green finance and environmental regulation is required to reduce environmental emissions and to improve sustainable development.

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  • Fushuai Wang & Wenxia Cai & Ehsan Elahi, 2021. "Do Green Finance and Environmental Regulation Play a Crucial Role in the Reduction of CO 2 Emissions? An Empirical Analysis of 126 Chinese Cities," Sustainability, MDPI, vol. 13(23), pages 1-20, November.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:23:p:13014-:d:686909
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    7. Jing Sun & Ningning Zhai & Jichao Miao & Huaping Sun, 2022. "Can Green Finance Effectively Promote the Carbon Emission Reduction in “Local-Neighborhood” Areas?—Empirical Evidence from China," Agriculture, MDPI, vol. 12(10), pages 1-13, September.
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