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Carbon-Reduction, Green Finance, and High-Quality Economic Development: A Case of China

Author

Listed:
  • Shaolong Zeng

    (School of Economics, Hangzhou Normal University, Hangzhou 311121, China)

  • Qinyi Fu

    (School of Economics, Hangzhou Normal University, Hangzhou 311121, China)

  • Fazli Haleem

    (Department of Management Sciences, Shaheed Benazir Bhutto University, Sheringal 18200, Pakistan)

  • Yang Shen

    (School of Economics, Hangzhou Normal University, Hangzhou 311121, China)

  • Jiedong Zhang

    (Hangzhou Economist Association, Hangzhou 311121, China)

Abstract

Development that is eco-friendly, coordinated, sustainable, and of the highest caliber is crucial to China’s modernization. Based on the Cobb–Douglas production function and environmental Kuznets curve analysis, this paper investigates the link between green finance and the reduction of carbon emissions and high-quality economic development, then puts forward the hypothesis that green finance promotes high-quality economic development, and carbon emission reduction effect is its important transmission mechanism. This paper applies the bidirectional fixed effect model to a panel dataset of 30 Chinese provinces, cities, and autonomous regions from 2008 to 2019 to conduct an empirical test. The empirical results show that: (1) Green finance has a significant role in promoting high-quality economic development, which has passed the robustness test and has regional heterogeneity. (2) The growth of green financing reduces carbon emissions, which encourages high-quality development. (3) A positive spatial spillover effect results from the promotion of green finance to high-quality economic development. Given the aforementioned findings, this paper makes policy recommendations regarding how green financing, carbon emission reduction, and high-quality economic development might work together to support green development.

Suggested Citation

  • Shaolong Zeng & Qinyi Fu & Fazli Haleem & Yang Shen & Jiedong Zhang, 2023. "Carbon-Reduction, Green Finance, and High-Quality Economic Development: A Case of China," Sustainability, MDPI, vol. 15(18), pages 1-22, September.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:18:p:13999-:d:1244543
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    1. Ziying Liu & Zhenzhong Shen & Wenqian Chang & Yingxiu Zhao, 2024. "Spatiotemporal Evolution of Green Finance and High-Quality Economic Development: Evidence from China," Sustainability, MDPI, vol. 16(13), pages 1-28, June.
    2. Shaolong Zeng & Qinyi Fu & Fazli Haleem & Yang Shen & Weibin Peng & Man Ji & Yilong Gong & Yilong Xu, 2024. "China’s carbon trading pilot policy, economic stability, and high-quality economic development," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-15, December.

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