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The Threshold Effect of China’s Financial Development on Green Total Factor Productivity

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  • Yingying Zhou

    (School of Management, China University of Mining and Technology, Xuzhou 221116, China)

  • Yaru Xu

    (School of Management, China University of Mining and Technology, Xuzhou 221116, China)

  • Chuanzhe Liu

    (School of Management, China University of Mining and Technology, Xuzhou 221116, China)

  • Zhuoqing Fang

    (School of Management, China University of Mining and Technology, Xuzhou 221116, China)

  • Xinyue Fu

    (School of Management, China University of Mining and Technology, Xuzhou 221116, China)

  • Mingzhao He

    (School of Management, China University of Mining and Technology, Xuzhou 221116, China)

Abstract

Using the slacks-based measure (SBM) directional distance function and constructing the Luenberger productivity index, we measure the green total factor productivity (GTFP) of China’s provinces under resource and environmental restrictions. At the same time, based on the provincial panel data, the threshold regression method is used to empirically analyze the impact of financial development on green total factor productivity and its threshold effect. The study explores how technological innovation, foreign direct investment (FDI), and environmental governance affect green total factor productivity, as well as how financial development plays a role in the direction and intensity of the impact, with a view to providing policy recommendations for promoting green economic development. The results show that: (1) during the sample period, China’s green total factor productivity had an overall upward trend, and pure technological progress was the main reason for the growth in the green all-factor growth rate; (2) taking financial development as a threshold dependent variable, financial development had a nonlinear, double-threshold effect on green total factor productivity and diminishing marginal efficiency; (3) the increase in financial development will help attract high-quality and low-pollution FDI inflows, and can exert a technology spillover from FDI to green total factor productivity; (4) the impact of technological innovation on green total factor productivity has a nonlinear feature, with significant positive and increasing marginal efficiency; and (5) there is a positive “U” relationship between environmental governance and green total factor productivity.

Suggested Citation

  • Yingying Zhou & Yaru Xu & Chuanzhe Liu & Zhuoqing Fang & Xinyue Fu & Mingzhao He, 2019. "The Threshold Effect of China’s Financial Development on Green Total Factor Productivity," Sustainability, MDPI, vol. 11(14), pages 1-23, July.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:14:p:3776-:d:247103
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    References listed on IDEAS

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    13. Wentao Hu & Xiaoxiao Li, 2023. "Financial Technology Development and Green Total Factor Productivity," Sustainability, MDPI, vol. 15(13), pages 1-28, June.
    14. Hong Yu & Jianmin Zhang & Ning Xu, 2023. "Does National Independent Innovation Demonstration Zone Construction Help Improve Urban Green Total Factor Productivity? A Policy Assessment from China," Sustainability, MDPI, vol. 15(9), pages 1-16, April.
    15. Xiaocang Xu & Xiuquan Huang & Jun Huang & Xin Gao & Linhong Chen, 2019. "Spatial-Temporal Characteristics of Agriculture Green Total Factor Productivity in China, 1998–2016: Based on More Sophisticated Calculations of Carbon Emissions," IJERPH, MDPI, vol. 16(20), pages 1-16, October.
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