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Hand in Hand or One Left Behind? The Spillovers of Green Finance on Energy Transition

Author

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  • Binyu Cai

    (School of Economics and Management, University of Chinese Academy of Sciences, No. 80 Zhongguancun East Road, Beijing 100190, China
    Sino-Danish College, University of Chinese Academy of Sciences, Beijing 100049, China)

  • Kun Guo

    (School of Economics and Management, University of Chinese Academy of Sciences, No. 80 Zhongguancun East Road, Beijing 100190, China
    Research Center on Fictitious Economy and Data Science, Chinese Academy of Sciences, No. 80 Zhongguancun East Road, Beijing 100190, China)

  • Na Li

    (School of Economics and Management, University of Chinese Academy of Sciences, No. 80 Zhongguancun East Road, Beijing 100190, China
    Research Center on Fictitious Economy and Data Science, Chinese Academy of Sciences, No. 80 Zhongguancun East Road, Beijing 100190, China)

Abstract

Amid the growing challenges of energy security and carbon neutrality, green finance has become an important policy instrument for promoting sustainable energy transitions. Using city-level data from China between 2009 and 2019 and a spatial Durbin model, this study not only examines local effects but also focuses on identifying the geographic and administrative boundaries of their spatial spillovers. The analysis reveals that green finance advances energy transition via fostering green innovation and optimizing industrial structures, with stronger effects in regions where public environmental awareness is higher. Pronounced regional heterogeneity is identified, as resource-abundant and economically developed cities respond more strongly to green finance. Furthermore, green finance generates positive spatial spillovers, improving the energy transition of neighboring cities within a 400 km radius, although these effects are weakened by interprovincial competition. Overall, the findings highlight the importance of regionally differentiated and coordinated green finance policies in supporting effective energy transitions.

Suggested Citation

  • Binyu Cai & Kun Guo & Na Li, 2026. "Hand in Hand or One Left Behind? The Spillovers of Green Finance on Energy Transition," Sustainability, MDPI, vol. 18(3), pages 1-25, January.
    • Handle: RePEc:gam:jsusta:v:18:y:2026:i:3:p:1305-:d:1850586
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