This paper is concerned with the environmental effects of financial agglomeration supporting green development for the entity economy at the city level. By analyzing panel data of Chinese 286 prefecture-level cities between 2007 and 2019, using an input-output method and the spatial Durbin model, the obtained results show that leasing and business services and manufacturing were the financial related industries. Financial agglomeration reduced the local and surrounding wastewater emission intensity, whereas the agglomeration of leasing and business services increased environmental pollution. The pollution reduction effect of industrial agglomeration exists but not all agglomerations can achieve green development. Further regional heterogeneity analysis of financial agglomeration revealed an increase in industrial wastewater pollution in the eastern economic belts and a decrease in the central and western regions. Overall findings suggest that inter-industry and regional coordination are crucial for shaping green cities through agglomeration economies.