IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v15y2023i18p13999-d1244543.html
   My bibliography  Save this article

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
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/15/18/13999/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/15/18/13999/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Yang, Yuxue & Su, Xiang & Yao, Shuangliang, 2021. "Nexus between green finance, fintech, and high-quality economic development: Empirical evidence from China," Resources Policy, Elsevier, vol. 74(C).
    2. Lee, Chi-Chuan & Lee, Chien-Chiang, 2022. "How does green finance affect green total factor productivity? Evidence from China," Energy Economics, Elsevier, vol. 107(C).
    3. Marvão Pereira, Alfredo & Marvão Pereira, Rui Manuel, 2010. "Is fuel-switching a no-regrets environmental policy? VAR evidence on carbon dioxide emissions, energy consumption and economic performance in Portugal," Energy Economics, Elsevier, vol. 32(1), pages 227-242, January.
    4. Guangyou Zhou & Chen Liu & Sumei Luo, 2021. "Resource Allocation Effect of Green Credit Policy: Based on DID Model," Mathematics, MDPI, vol. 9(2), pages 1-18, January.
    5. Min Hong & Zhenghui Li & Benjamin Drakeford, 2021. "Do the Green Credit Guidelines Affect Corporate Green Technology Innovation? Empirical Research from China," IJERPH, MDPI, vol. 18(4), pages 1-21, February.
    6. Hu, Hui & Qi, Shaozhou & Chen, Yuanzhi, 2023. "Using green technology for a better tomorrow: How enterprises and government utilize the carbon trading system and incentive policies," China Economic Review, Elsevier, vol. 78(C).
    7. Yiting Zeng & Feng Wang & Jun Wu, 2022. "The Impact of Green Finance on Urban Haze Pollution in China: A Technological Innovation Perspective," Energies, MDPI, vol. 15(3), pages 1-20, January.
    8. Lili Guo & Shuang Zhao & Yuting Song & Mengqian Tang & Houjian Li, 2022. "Green Finance, Chemical Fertilizer Use and Carbon Emissions from Agricultural Production," Agriculture, MDPI, vol. 12(3), pages 1-18, February.
    9. Gene M. Grossman & Alan B. Krueger, 1995. "Economic Growth and the Environment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(2), pages 353-377.
    10. Irfan, Muhammad & Razzaq, Asif & Sharif, Arshian & Yang, Xiaodong, 2022. "Influence mechanism between green finance and green innovation: Exploring regional policy intervention effects in China," Technological Forecasting and Social Change, Elsevier, vol. 182(C).
    11. Lili Guo & Sihang Guo & Mengqian Tang & Mengying Su & Houjian Li, 2022. "Financial Support for Agriculture, Chemical Fertilizer Use, and Carbon Emissions from Agricultural Production in China," IJERPH, MDPI, vol. 19(12), pages 1-19, June.
    12. Yong Fang & Zhenquan Shao, 2022. "Whether Green Finance Can Effectively Moderate the Green Technology Innovation Effect of Heterogeneous Environmental Regulation," IJERPH, MDPI, vol. 19(6), pages 1-19, March.
    13. Rui Cai & Jianluan Guo, 2021. "Finance for the Environment: A Scientometrics Analysis of Green Finance," Mathematics, MDPI, vol. 9(13), pages 1-15, July.
    14. Ouyang, Haiqin & Guan, Chao & Yu, Bo, 2023. "Green finance, natural resources, and economic growth: Theory analysis and empirical research," Resources Policy, Elsevier, vol. 83(C).
    15. Ozili, Peterson K, 2021. "Digital finance, green finance and social finance: is there a link?," MPRA Paper 110151, University Library of Munich, Germany.
    16. Wang, Jiaqi & Tian, Jiaxin & Kang, Yuxin & Guo, Kun, 2023. "Can green finance development abate carbon emissions: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 88(C), pages 73-91.
    17. Lee, Chien-Chiang & Wang, Fuhao, 2022. "How does digital inclusive finance affect carbon intensity?," Economic Analysis and Policy, Elsevier, vol. 75(C), pages 174-190.
    18. Zhifeng Zhang & Hongyan Duan & Shuangshuang Shan & Qingzhi Liu & Wenhui Geng, 2022. "The Impact of Green Credit on the Green Innovation Level of Heavy-Polluting Enterprises—Evidence from China," IJERPH, MDPI, vol. 19(2), pages 1-19, January.
    19. Wang, Xinyue & Wang, Qing, 2021. "Research on the impact of green finance on the upgrading of China's regional industrial structure from the perspective of sustainable development," Resources Policy, Elsevier, vol. 74(C).
    20. Liu, Xinghe & Wang, Enxian & Cai, Danting, 2019. "Green credit policy, property rights and debt financing: Quasi-natural experimental evidence from China," Finance Research Letters, Elsevier, vol. 29(C), pages 129-135.
    21. Xi Chen & Zhigang Chen, 2021. "Can Green Finance Development Reduce Carbon Emissions? Empirical Evidence from 30 Chinese Provinces," Sustainability, MDPI, vol. 13(21), pages 1-18, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. 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.
    2. 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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lee, Chien-Chiang & Wang, Fuhao & Lou, Runchi & Wang, Keying, 2023. "How does green finance drive the decarbonization of the economy? Empirical evidence from China," Renewable Energy, Elsevier, vol. 204(C), pages 671-684.
    2. Lu, Yuchen & Gao, Yuqiang & Zhang, Yu & Wang, Junrong, 2022. "Can the green finance policy force the green transformation of high-polluting enterprises? A quasi-natural experiment based on “Green Credit Guidelines”," Energy Economics, Elsevier, vol. 114(C).
    3. Xiaoyang Xu & Yufan Xie & Emma Serwaa Obobisa & Huaping Sun, 2023. "Has the establishment of green finance reform and innovation pilot zones improved air quality? Evidence from China," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-14, December.
    4. Decai Tang & Hui Zhong & Jingyi Zhang & Yongguang Dai & Valentina Boamah, 2022. "The Effect of Green Finance on the Ecological and Environmental Quality of the Yangtze River Economic Belt," IJERPH, MDPI, vol. 19(19), pages 1-17, September.
    5. Qadri, Hussain Mohi ud Din & Ali, Hassnian & Abideen, Zain ul & Jafar, Ahmad, 2024. "Mapping the Evolution of Green Finance Research and Development in Emerging Green Economies," Resources Policy, Elsevier, vol. 91(C).
    6. Lingui Qin & Yan Zhang & Yige Wang & Xinning Pan & Zhe Xu, 2024. "Research on the Impact of Digital Green Finance on Agricultural Green Total Factor Productivity: Evidence from China," Agriculture, MDPI, vol. 14(7), pages 1-23, July.
    7. Su, Chi-Wei & Li, Wenhao & Umar, Muhammad & Lobonţ, Oana-Ramona, 2022. "Can green credit reduce the emissions of pollutants?," Economic Analysis and Policy, Elsevier, vol. 74(C), pages 205-219.
    8. Tang, Xinmeng & Zhou, Xiaoguang, 2023. "Impact of green finance on renewable energy development: A spatiotemporal consistency perspective," Renewable Energy, Elsevier, vol. 204(C), pages 320-337.
    9. Zirong Lin & Hui Wang & Wei Li & Min Chen, 2023. "Impact of Green Finance on Carbon Emissions Based on a Two-Stage LMDI Decomposition Method," Sustainability, MDPI, vol. 15(17), pages 1-28, August.
    10. Mo Du & Ruirui Zhang & Shanglei Chai & Qiang Li & Ruixuan Sun & Wenjun Chu, 2022. "Can Green Finance Policies Stimulate Technological Innovation and Financial Performance? Evidence from Chinese Listed Green Enterprises," Sustainability, MDPI, vol. 14(15), pages 1-28, July.
    11. Feng, Chao & Zhong, Siqi & Wang, Miao, 2024. "How can green finance promote the transformation of China's economic growth momentum? A perspective from internal structures of green total-factor productivity," Research in International Business and Finance, Elsevier, vol. 70(PA).
    12. Liu, Yang & Zhao, Xiaomeng & Dong, Kangyin & Jiang, Qingzhe, 2023. "Assessing the role of green finance in sustainable energy investments by power utilities: Evidence from China," Utilities Policy, Elsevier, vol. 84(C).
    13. Tao Shi, 2022. "The Spatiotemporal Evolutionary Trend and Driving Factors of the Coupling Coordinated Development between Regional Green Finance and Ecological Environment," IJERPH, MDPI, vol. 19(10), pages 1-25, May.
    14. Lei Nie & Purong Chen & Xiuli Liu & Qinqin Shi & Jing Zhang, 2022. "Coupling and Coordinative Development of Green Finance and Industrial-Structure Optimization in China: Spatial-Temporal Difference and Driving Factors," IJERPH, MDPI, vol. 19(17), pages 1-22, September.
    15. Wang, Yufeng, 2023. "Can the green credit policy reduce carbon emission intensity of “high-polluting and high-energy-consuming” enterprises? Insight from a quasi-natural experiment in China," Global Finance Journal, Elsevier, vol. 58(C).
    16. Libin Feng & Zhengcheng Sun, 2023. "The Impact of Green Finance Pilot Policy on Carbon Intensity in Chinese Cities—Based on the Synthetic Control Method," Sustainability, MDPI, vol. 15(15), pages 1-21, July.
    17. Liu, Ting & Quan, Lei & Gao, Xing, 2023. "Social dishonesty and corporate green innovation," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 967-985.
    18. Pengfei Cheng & Xiaofeng Wang & Baekryul Choi & Xingang Huan, 2023. "Green Finance, International Technology Spillover and Green Technology Innovation: A New Perspective of Regional Innovation Capability," Sustainability, MDPI, vol. 15(2), pages 1-16, January.
    19. Yan Yang & Yingli Zhang, 2022. "The Impact of the Green Credit Policy on the Short-Term and Long-Term Debt Financing of Heavily Polluting Enterprises: Based on PSM-DID Method," IJERPH, MDPI, vol. 19(18), pages 1-18, September.
    20. Pang, Lidong & Zhu, Meng Nan & Yu, Haiyan, 2022. "Is green finance really a blessing for green technology and carbon efficiency?," Energy Economics, Elsevier, vol. 114(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:15:y:2023:i:18:p:13999-:d:1244543. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.