Diffusion of environmental technology innovation through the lens of banking sector performance and human resource management: an influential step towards environmental sustainability.

Abstract

Environmental technology innovations are widely recognized as the most suitable option to achieve sustainable and green development. Since banks and other financial institutions offer essential funding for investments in environmental technology projects, the banking sector and human resources are essential to developing and promoting environmental technology innovation. This study aims to investigate the impact of banking sector performance and human resources on environmental technology innovation in China, utilizing the ARDL method. The research focuses on the period spanning from 1996 to 2021. The outcomes of the ARDL model approve that short- and long-term banking sector performances positively impact environmental technology innovation in China. Among the four proxies for the banking sector's performance, market capitalization, bank deposits, and bank Z-score are substantially and favorably associated with long-term environmental technology innovation in China. However, only the banking sector's performance fosters environmental technology innovation in the short term; all other measures of banking sector performance are insignificant. Human resource positively impacts green innovation in China in the long run. Furthermore, China's long-term GDP growth and environmental pressures support environmental technology innovation. Therefore, policymakers should provide specific incentives to encourage human resource management and financial institutions that lead to the advancement of environmental technology innovation.