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A Study of Spatial Spillovers from Fiscal Decentralization on the Efficiency of Green Economy—And the Moderating Role of Financial Decentralization

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  • Haonan Chen

    (School of Economics, Capital University of Economics and Business, Fengtai District, Beijing 100070, China)

  • Xiaoyang Yang

    (School of Economics, Capital University of Economics and Business, Fengtai District, Beijing 100070, China)

Abstract

A robust fiscal and financial system constitutes a fundamental pillar of national governance. This paper investigates the spatial correlation between fiscal decentralization, financial decentralization, and local green economic efficiency using panel data from 285 cities in China. The findings reveal several key insights. First, fiscal decentralization hampers local green economic efficiency enhancement but exerts a “warning effect” on neighboring regions. In contrast, financial decentralization promotes local green economic efficiency and triggers a “clustering effect” on neighboring areas, indicating an agglomeration impact. Second, synergies from financial decentralization on local green economic efficiency are not immediately apparent, while they mitigate the enhancement of neighboring regions’ green economic efficiency. Third, the maturity of the financial market system and the completeness of infrastructure positively influence the impact of financial decentralization on green economic efficiency. Fourth, fiscal and financial decentralization significantly impacts green economic efficiency in the short term, yet their long-term effects are negligible. Consequently, this paper recommends enhancing infrastructure development and instituting a dynamic mechanism for adjusting fiscal and financial decentralization. Based on the aforementioned findings, this paper provides corresponding countermeasure recommendations. These recommendations not only contribute academically to the study of green efficiency from the perspectives of fiscal and financial decentralization but also offer a Chinese model for other developing countries seeking to balance fiscal, financial, and green sustainable development.

Suggested Citation

  • Haonan Chen & Xiaoyang Yang, 2024. "A Study of Spatial Spillovers from Fiscal Decentralization on the Efficiency of Green Economy—And the Moderating Role of Financial Decentralization," Sustainability, MDPI, vol. 16(15), pages 1-21, July.
    • Handle: RePEc:gam:jsusta:v:16:y:2024:i:15:p:6487-:d:1445422
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    Cited by:

    1. Yiming Li & Liru Bai, 2024. "Economic Decentralization and High-Quality Urban Development: Perspective from Local Effect and Spatial Spillover in 276 Prefecture-Level Cities in China," Sustainability, MDPI, vol. 16(22), pages 1-33, November.
    2. Bonoua Faye & Jeanne Colette Diéne & Guoming Du & Chang’an Liang & Yao Dinard Kouadio & Edmée Mbaye & Yuheng Li, 2024. "Decentralization Policies and Rural Socio-Economic Growth in Senegal: An Exploration of Their Contributions to Development and Transformation," World, MDPI, vol. 5(4), pages 1-23, November.

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