Does financial development promote high-quality economic development goals of China? Novel findings and implications from technological innovation perspective

China is dedicated to advancing high-quality economic development (HED) in alignment with the United Nations' Sustainable Development Goals (SDGs), focusing on ecological civilization and social welfare. Financial support is crucial for sustainable and rapid economic growth. This study utilizes panel data from 30 provinces and municipalities in China to examine the impact of financial development on HED, particularly in relation to scientific and technological innovation (STI). The study utilizes a threshold regression model. The findings assert that development of finance significantly contributes to HED of China. Among the categorical indicators of development of finance, efficiency of financial development yields the most pronounced impact, followed by structure of financial development, while financial development scale exerts the least influence. Augmenting the caliber of STI magnifies the contribution of financial development and its categorical indicators to HED. However, as the STI level improves further, financial development's overall role in promoting HED diminishes. In order to realize high-quality development, enhancing the efficiency of financial development is crucial, optimize its structure, and promote effective collaboration between financial development and STI. The government should leverage the active role of finance in eco-environmental governance and technological innovation.

Automated summary

This study examines the impact of financial development on high-quality economic development (HED) in China, with a focus on the efficiency, structure, and scale of financial development. The findings highlight the importance of scientific and technological innovation (STI) in further enhancing the contribution of financial development to HED. However, as the level of STI improves, the overall role of financial development in promoting HED diminishes. Therefore, the government should prioritize improving the efficiency and structure of financial development and promoting effective collaboration between financial development and STI to achieve high-quality economic development.