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Would Financial Development Help China Achieve Carbon Peak Emissions?

Author

Listed:
  • Ping Ji

    (International Business School, Southwestern University of Finance and Economics, Chengdu 611130, China)

  • Weidong Huo

    (International Business School, Southwestern University of Finance and Economics, Chengdu 611130, China
    School of Finance and Trade, Liaoning University, Shenyang 110136, China)

  • Lan Bo

    (Sunwah International Business School, Liaoning University, Shenyang 110136, China)

  • Weiwei Zhang

    (Sunwah International Business School, Liaoning University, Shenyang 110136, China)

  • Xiaoxian Chen

    (School of Finance and Trade, Liaoning University, Shenyang 110136, China)

Abstract

China has committed to reaching carbon peak before 2030. To realize the carbon peak goal, financial development plays an essential role in developing a green economy. Based on the panel data of 30 provinces in China from 2006 to 2019, this paper explores the impact of financial development on carbon intensity both theoretically and empirically. A financial development index system is constructed and computed using the entropy method. A spatial lag panel data model is employed to empirically test the interaction effect of financial development on carbon intensity. Moreover, the mediating effects of industrial upgrading and technological innovation are further investigated. The results show that: first, carbon intensity generates strong spatial spillover effects between provinces in China. Second, financial development significantly reduces carbon intensity, and is most pronounced in central China, followed by western and eastern China. Third, industrial upgrading and technological innovation are important channels to assist financial development in cutting down carbon intensity, and both produce positive spatial spillover effects. These findings suggest that inter-regional cooperation and coordination on financial development, industrial upgrading, and technological innovation are conducive to achieving low-carbon development targets. This research not only has practical significance to China, but also provides global reference value to other countries.

Suggested Citation

  • Ping Ji & Weidong Huo & Lan Bo & Weiwei Zhang & Xiaoxian Chen, 2022. "Would Financial Development Help China Achieve Carbon Peak Emissions?," IJERPH, MDPI, vol. 19(19), pages 1-19, October.
    • Handle: RePEc:gam:jijerp:v:19:y:2022:i:19:p:12850-:d:935646
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    2. Ramzan, Muhammad & Abbasi, Kashif Raza & Salman, Asma & Dagar, Vishal & Alvarado, Rafael & Kagzi, Muneza, 2023. "Towards the dream of go green: An empirical importance of green innovation and financial depth for environmental neutrality in world's top 10 greenest economies," Technological Forecasting and Social Change, Elsevier, vol. 189(C).

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