Can green transformation finance contribute to urban carbon emission performance? An empirical analysis based on a spatiotemporal bi-fixed SPDM model.

Abstract

"Carbon peaking" and "carbon neutrality" are serious challenges at this stage, and the function of the green transformation finance (GTF) in the operation of carbon dioxide emission reduction is an urgent issue to be explored. However, empirical studies on GTF and carbon emission performance (CEP) are lacking. Given that, this research employs a panel dataset of 278 cities in China spanning the years 2006 to 2020 to measure the CEP of Chinese cities using the non-radial directional distance function (NDDF) approach and applies the SPDM and the intermediary effect model to practically analyze the spatial effects and mechanisms of GTF in promoting CEP. The findings derived from the empirical analysis indicate that (1) the level of GTF and CEP shows a trend of year-on-year increase, and there is a significant spatial correlation, but the absolute difference in CEP between cities increases. (2) GTF promotes the improvement of CEP in local cities. It reveals a favorable spillover impact on enhancing the neighboring cities' CEP. Furthermore, the research findings remain pertinent even after conducting rigorous tests to ensure their robustness. (3) Regional heterogeneity has been observed in the impact of GTF on CEP, with the development of GTF significantly contributing to the amelioration of CEP of neighboring cities in the east, significantly contributing to the improvement of local CEP of central cities and simultaneously contributing to the improvement of local and neighboring cities' CEP in the west. (4) The findings of the intermediary examination show that GTF mainly promotes CEP through the positive incentive effect of promoting green innovation in technology and the reverse push-back effect of optimizing the structure of industries. (5) The spatial spillover effect of GTF on CEP is more sensitive under the geographic distance matrix, showing a "three-stage" decay characteristic from near to far, and its influence range is roughly 300km. Therefore, China should strengthen the development of GTF, cross-city communication and cooperation to boost the accomplishment of the carbon neutrality objective.