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How Green Finance Affects Green Total Factor Productivity—Evidence from China

Author

Listed:
  • Min Zhang

    (School of Economics and Management, Changchun University of Science and Technology, Changchun 130022, China)

  • Chengrong Li

    (School of Economics and Management, Changchun University of Science and Technology, Changchun 130022, China)

  • Jinshan Zhang

    (School of Business and Management, Jilin University, Changchun 130012, China)

  • Hongwei Chen

    (School of Economics and Management, Changchun University of Science and Technology, Changchun 130022, China)

Abstract

Green finance is currently a key driver of China’s economic green transformation, but its impact on green total factor productivity (GTFP) mechanisms still needs further examination. Based on clarifying the theoretical mechanism of the impact of green finance on GTFP, this study uses the SBM model, which includes unexpected output, to calculate the GTFP of 30 provinces in China from 2006 to 2020. It further breaks down GTFP into green technical efficiency change (EC) and green technical change (TC) and explores in detail the internal mechanism of the impact of green finance on GTFP, as well as its channels of action from the perspectives of technology transaction activity and financial development. The study finds that green finance can significantly improve GTFP, and its impact mechanism is mainly achieved through the promotion of green technical change. Stimulating the activity of the technology transaction market and improving the level of financial development are powerful channels for green finance to improve GTFP. The study also shows that the impact of green finance is relatively robust when dividing the 30 provinces of China into coastal, inland, eastern, central, and western regions. Due to the lack of financial development and abundant natural resources, the impact of green finance is not significant in the western region. These conclusions not only provide new research perspectives and supplementary empirical evidence for understanding the impact of green finance on GTFP, but also provide useful references for further improving relevant policies and promoting China’s economic development and transformation.

Suggested Citation

  • Min Zhang & Chengrong Li & Jinshan Zhang & Hongwei Chen, 2023. "How Green Finance Affects Green Total Factor Productivity—Evidence from China," Sustainability, MDPI, vol. 16(1), pages 1-18, December.
    • Handle: RePEc:gam:jsusta:v:16:y:2023:i:1:p:270-:d:1308780
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    References listed on IDEAS

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