Do Green Finance and Environmental Regulation Play a Crucial Role in the Reduction of CO2 Emissions? An Empirical Analysis of 126 Chinese Cities

Green finance and environmental regulation can reduce CO2 emissions and promote the sustainability of economic development. Based on panel data of 126 resource-based prefecture-level cities in China from 2005 to 2017, the current study used a dynamic panel data model to empirically determine the CO2 emission reduction effects of different green finance instruments under different environmental regulatory intensities. The results showed that green finance tools had significant negative effects on the intensity of CO2 emissions, and green finance can adapt to environmental regulations of different intensities, which cooperated to promote carbon emission reduction. Moreover, in comparison, the debt-based green finance instrument had a stronger effect than the equity-based green finance instrument, and they did not show a coupling relationship. An administrative adjustment in green finance and environmental regulation is required to reduce environmental emissions and to improve sustainable development.

Automated summary

The study shows that green finance instruments can play a positive role in reducing CO2 emissions, and different types of green finance instruments have different effects under environmental regulations. It is necessary to strengthen the coordination and adjustment of green finance and environmental regulation to promote emission reduction and sustainable development.