Spatial Heterogeneity Effects of Green Finance on Absolute and Relative Poverty

Abstract

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.