Impact of green finance on low-carbon transformation: Spatial spillover effects in China

This study developed a green financial indicator system based on a Principal Component Analysis (PCA) approach to investigate the impacts of green finance on carbon emissions by using the panel data from 30 Chinese provinces and municipalities from 2014 to 2021. The key findings conclude that green investments and debts are effective at reducing emissions, while green equity has a limited impact. Empirical results demonstrate that green finance enhances innovation efficiency, which in turn facilitates reductions in emissions. Additionally, the Spatial Durbin Model indicates significant spatial spillover effects, with progress in one province benefiting neighboring areas. The policy implications of the study suggest that enhancing green equity and adapting finance strategies to regional conditions could significantly advance the carbon reduction objectives for China.