Abstract
This paper provides an in-depth understanding of the mechanisms of green finance on green innovation, focusing on their spatial and non-linear relationships. Using panel data of 30 provinces of China during the period of 2009–2017, a green finance index is constructed, and the spatial Durbin model and panel threshold model are used. The results reveal that: (1) Green finance and green innovation had significant positive autocorrelation , and the development of green finance in provinces of central and western China were still in the lower-level range. (2) The coefficients of the direct effect and indirect effect of green finance on green innovation were significantly positive, which indicated that green finance was conducive to enhancing green innovation in local and adjacent provinces during the research period. (3) Double threshold effects of green finance on green innovation were observed, which demonstrated that the driving effect of green finance was decreased with the raising of intensity of environmental regulation. The implication of these results is that government should make full use of the radiation and trickle-down functions of green finance and green innovation to narrow regional gaps in sustainable development while maintaining a moderate intensity of environmental regulation. • A green finance index of 30 provinces of China during the period of 2009 to 2017 was constructed on the basis of green credit, green securities, green insurance, and green investment. • The heterogeneity of region and time for green finance were analyzed employing the spatial exploratory analysis, which manifested that the spatial evolution of green finance in China presents a gradient decreasing pattern from east to west. • The impact of green finance on green innovation was explored by the spatial Durbin model, which proved that the direct effect and the spatial spillover effect were significantly positive. • Moderate intensity of environmental regulation helps green finance promote green innovation and this value should not exceed a maximum of 0.935.
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