Spatial Heterogeneity Effects of Green Finance on Absolute and Relative Poverty

In light of the growing emphasis on sustainable development, financial poverty alleviation has become an increasingly important strategy. This study explores whether green finance, a new financial tool aimed at achieving sustainable development, can effectively reduce poverty. Using data from 25 provinces in China between 2004 and 2019, the study builds the China Green Financial Development Index, using the improved entropy power method, and uses a spatial econometric model to analyze the linear and non-linear impact of green finance on absolute and relatively poor poverty. The results demonstrate that green finance has a positive impact on poverty reduction, with a more significant impact on rural poverty reduction than urban poverty reduction. Interestingly, non-linear results reveal that the impact of green finance on rural poverty alleviation has gradually weakened, while the impact on urban poverty alleviation has gradually increased. Moreover, the introduction of technological progress as an intermediary variable has revealed an intermediary effect between green finance and poverty reduction. Overall, this study contributes to our understanding of the link between green finance and poverty and suggests a new approach to poverty alleviation.

Automated summary

In the context of sustainable development, financial poverty alleviation has gained importance. This study examines the effectiveness of green finance, a new financial tool for sustainable development, in reducing poverty. Using data from 25 provinces in China, the study constructs the China Green Financial Development Index and employs a spatial econometric model to analyze the impact of green finance on absolute and relative poverty. The results show that green finance has a positive impact on poverty reduction, with a stronger effect on rural poverty. Interestingly, the nonlinear analysis reveals a weakening effect on rural poverty alleviation and a strengthening effect on urban poverty alleviation over time. The study also highlights the intermediary role of technological progress in the relationship between green finance and poverty reduction. Overall, this study contributes to understanding the link between green finance and poverty and proposes a new approach to poverty alleviation.