Green financial policy, technological advancement reversal, assessment of emission reduction effects

The construction of a green financial system is of great practical significance for promoting the high-quality development of China's green economy and accelerating the process of achieving the goal of carbon neutrality. To explore the innovation effect and the effect of pollutant emission reduction of green financial policies theoretically and further examined by empirical results, we construct an endogenous growth model that considers green financial policies and heterogeneous production technologies based on the biased technological progress theory and explore the dynamic relationship between technological progress and pollutant emission reduction. Additionally, we employ the synthetic control method to examine the effect of innovation and emission reduction of pilot zones for green finance reform policies. Theoretically, (1) the direction of technological progress results from the interaction of the existing technological levels, sectoral R&D efficiency, and heterogeneous credit policies; (2) The stronger the credit preferential policies, the greater the promotion effect on green innovation; (3) The emissions reduction effect appears only when there is a strong substitution relationship between clean and polluting intermediates. From empirical results, (4) the implementation of green financial policies in Guangzhou promotes green technological progress. However, subject to potential influences from R&D efficiency, financial development scale, and production technology levels, the green financial policies implemented in Huzhou, Quzhou, and Karamay do not significantly promote green innovation; (5) The green finance has a positive policy effect on emission reduction and improvement in environmental quality, although the effect exhibits a time lag. Finally, we propose policy suggestions to advance the green financial system construction, thereby fostering regional innovation and emission reduction.