IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v16y2024i4p1377-d1334515.html
   My bibliography  Save this article

Can Green Finance Mitigate China’s Carbon Emissions and Air Pollution? An Analysis of Spatial Spillover and Mediation Pathways

Author

Listed:
  • Huidong Liu

    (Chinese Research Academy of Environmental Sciences, Beijing 100012, China
    Environmental Development Center of the Ministry of Ecology and Environment, Beijing 100029, China)

  • Jing Yang

    (Environmental Development Center of the Ministry of Ecology and Environment, Beijing 100029, China)

  • Fang Zhao

    (Environmental Development Center of the Ministry of Ecology and Environment, Beijing 100029, China)

  • Lei Jiang

    (School of Geography and Remote Sensing, Guangzhou University, Guangzhou 510006, China)

  • Na Li

    (Environmental Development Center of the Ministry of Ecology and Environment, Beijing 100029, China)

Abstract

China faces a multi-objective environmental governance dilemma involving achieving fundamental ecological environment improvement, carbon peaking, and carbon neutrality. In this study, we constructed indicators of the level of green finance development through the entropy-weighted TOPSIS evaluation model, and adopted the two-way fixed-effect spatial Durbin model (SDM) and the multiple spatial mediation effect model to explore the impacts and paths of green finance as a policy tool to promote environmental sustainability in carbon emissions and environmental pollution using panel data from 30 provinces in China between 2007 and 2019. The research results show that green finance (GF) can significantly reduce carbon emission intensity (CEI) and air pollution (AP). Moreover, the role of GF in reducing AP becomes weaker due to increased levels of green finance in neighboring regions negatively affecting local air quality. Mediation path analysis shows that GF reduces CEI and AP mainly by promoting the optimization of energy structures and technological progress. The results of regional heterogeneity analysis show that there is variability in the pathway of the impact of GF on CEI and AP in different regions, and the Western region is more sensitive to GF policies. Therefore, policymakers should give their full attention to the functions of GF to mitigate China’s carbon emissions and environmental pollution.

Suggested Citation

  • Huidong Liu & Jing Yang & Fang Zhao & Lei Jiang & Na Li, 2024. "Can Green Finance Mitigate China’s Carbon Emissions and Air Pollution? An Analysis of Spatial Spillover and Mediation Pathways," Sustainability, MDPI, vol. 16(4), pages 1-16, February.
    • Handle: RePEc:gam:jsusta:v:16:y:2024:i:4:p:1377-:d:1334515
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/16/4/1377/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/16/4/1377/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Lee, Chien-Chiang & Wang, Fuhao & Chang, Yu-Fang, 2023. "Does green finance promote renewable energy? Evidence from China," Resources Policy, Elsevier, vol. 82(C).
    2. Shuai Guan & Jinquan Liu & Yongfu Liu & Mingze Du, 2022. "The Nonlinear Influence of Environmental Regulation on the Transformation and Upgrading of Industrial Structure," IJERPH, MDPI, vol. 19(14), pages 1-16, July.
    3. Liu, Xinghe & Wang, Enxian & Cai, Danting, 2019. "Green credit policy, property rights and debt financing: Quasi-natural experimental evidence from China," Finance Research Letters, Elsevier, vol. 29(C), pages 129-135.
    4. Dina Azhgaliyeva & Zhanna Kapsalyamova, 2023. "Policy support in promoting green bonds in Asia: empirical evidence," Climate Policy, Taylor & Francis Journals, vol. 23(4), pages 430-445, April.
    5. Valentina Boamah & Decai Tang & Qian Zhang & Jianqun Zhang, 2023. "Do FDI Inflows into African Countries Impact Their CO 2 Emission Levels?," Sustainability, MDPI, vol. 15(4), pages 1-18, February.
    6. Lan, Jing & Wei, Yiming & Guo, Jie & Li, Qiuming & Liu, Zhen, 2023. "The effect of green finance on industrial pollution emissions: Evidence from China," Resources Policy, Elsevier, vol. 80(C).
    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. Lee, Chien-Chiang & Wang, Chih-Wei & Liu, Fengyun, 2024. "Does green credit promote the performance of new energy companies and how? The role of R&D investment and financial development," Renewable Energy, Elsevier, vol. 235(C).
    2. Qu Yang & Shiyi Ming & Rongguang Zhang & Haitao Yan, 2024. "Green finance and corporate environmental investment: "Scale Up" or "Efficiency Up"?," PLOS ONE, Public Library of Science, vol. 19(2), pages 1-19, February.
    3. Xiuli Liu & Jing Cui & Yanrui Wu & Xiaohang Yue & Jun Shen & Pibin Guo, 2024. "The Nexus between Green Finance and Carbon Emissions: Evidence from Maturity Mismatch in China," Sustainability, MDPI, vol. 16(10), pages 1-24, May.
    4. Wang, Xiaoyin & Gao, Cuiyun, 2024. "Does green finance policy help to improve carbon reduction welfare performance? Evidence from China," Energy Economics, Elsevier, vol. 132(C).
    5. Jiang, Pengcheng & Jiang, Hongli & Wu, Jiahui, 2022. "Is inhibition of financialization the sub-effect of the green credit policy? Evidence from China," Finance Research Letters, Elsevier, vol. 47(PB).
    6. Zhao, Xing & Li, Xiangqian & He, Zhuoyi & Shi, Ruoying, 2024. "The relationship between the acquisition of corporate credit and the gender of executives: Evidence from developing countries," Finance Research Letters, Elsevier, vol. 62(PA).
    7. Skare, Marinko & Gavurova, Beata & Sinkovic, Dean, 2023. "Regional aspects of financial development and renewable energy: A cross-sectional study in 214 countries," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 1142-1157.
    8. Tingting Song & Hongyue Li & Ziyang Feng, 2024. "Policy and market mechanisms for promoting sustainable energy transition: role of government and private sector," Economic Change and Restructuring, Springer, vol. 57(4), pages 1-30, August.
    9. Chun-Wei Chen & Junxiong Zheng & Tin-Chang Chang & Muhammad Sadiq & Bushra Tufail, 2025. "Green finance policy and heavy pollution enterprises: a supply-chain and signal transmission of green credit policy for the environment—Vietnam perspective," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 27(1), pages 2317-2335, January.
    10. Xu, Jin & Liu, Chengjun & Dou, Gang & Cai, Yunfei, 2024. "Mineral resource management in Chinese rural areas: Policy assessment for green economic growth," Resources Policy, Elsevier, vol. 90(C).
    11. Sampene, Agyemang Kwasi & Li, Cai & Wiredu, John, 2024. "An outlook at the switch to renewable energy in emerging economies: The beneficial effect of technological innovation and green finance," Energy Policy, Elsevier, vol. 187(C).
    12. Yuan, Na & Gao, Yihong, 2022. "Does green credit policy impact corporate cash holdings?," Pacific-Basin Finance Journal, Elsevier, vol. 75(C).
    13. Yongfu Liu & Shuai Guan, 2023. "The Impact of Environmental Regulation on the Upgrading of Urban Industrial Structure: A Quasi-Natural Experiment Based on the Two Control Zones Policy," Sustainability, MDPI, vol. 15(18), pages 1-17, September.
    14. Wang, Quan-Jing & Wang, Hai-Jie & Chang, Chun-Ping, 2022. "Environmental performance, green finance and green innovation: What's the long-run relationships among variables?," Energy Economics, Elsevier, vol. 110(C).
    15. Tiwari, Aviral Kumar & Trabelsi, Nader & Abakah, Emmanuel Joel Aikins & Nasreen, Samia & Lee, Chien-Chiang, 2023. "An empirical analysis of the dynamic relationship between clean and dirty energy markets," Energy Economics, Elsevier, vol. 124(C).
    16. Muntazir Hussain & Ramiz Ur Rehman & Usman Bashir, 2024. "Environmental pollution, innovation, and financial development: an empirical investigation in selected industrialized countries using the panel ARDL approach," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(11), pages 29217-29248, November.
    17. Shi, Jinyan & Yu, Conghui & Li, Yanxi & Wang, Tianhe, 2022. "Does green financial policy affect debt-financing cost of heavy-polluting enterprises? An empirical evidence based on Chinese pilot zones for green finance reform and innovations," Technological Forecasting and Social Change, Elsevier, vol. 179(C).
    18. Ge, Shilong & Luo, Xiaodan & Li, Yuangang & Zheng, Lanxing, 2024. "The impact of green credit policy on total factor productivity of enterprises," International Review of Economics & Finance, Elsevier, vol. 95(C).
    19. Peng, Changhong & Chen, Dongjing & Jia, Daizheng & Liu, Qiao & Xu, Xin, 2025. "Can green credit policies reduce enterprise risk? Evidence from China," International Review of Financial Analysis, Elsevier, vol. 97(C).
    20. Tian, Jinfang & Sun, Siyang & Cao, Wei & Bu, Di & Xue, Rui, 2024. "Make every dollar count: The impact of green credit regulation on corporate green investment efficiency," Energy Economics, Elsevier, vol. 130(C).

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    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:gam:jsusta:v:16:y:2024:i:4:p:1377-:d:1334515. 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: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    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.