Abstract
This paper investigates whether city commercial banks’ expansion can boost energy efficiency to achieve regional carbon-neutral in China spanning the period from 2003 to 2017, including local expansion and cross-regional expansion. We find a significant positive association between the expansion of city commercial banks and energy efficiency. Specifically, the expansion of city commercial banks improved energy efficiency by easing financing constraints. However, the local expansion of city commercial banks worsens credit allocation and the relationship between government and market and decreases energy efficiency. In contrast, cross-regional expansion, which improved credit allocation and the relationship between government and market, increased energy efficiency. This contrasting effect on energy efficiency is pronounced in the eastern region. Our study suggests that the nature of city commercial banks’ expansion crucially affects its potential benefits to energy efficiency improvement.
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