ABSTRACT This paper examines the role and underlying mechanisms of science and technology fiscal expenditure in fostering urban green innovation. As global environmental challenges intensify, urban green innovation has emerged as a critical factor in optimizing resource efficiency, improving economic competitiveness, and promoting sustainable development. Utilizing panel data from Chinese cities spanning from 2005 to 2021, we used the two-way fixed effects model to find that fiscal expenditure on science and technology has a significant positive effect on urban green innovation. Further analysis reveals that fintech is critical to this process. A heterogeneity analysis using the same approach described above demonstrates that cities that are non-resource-based, have higher fiscal decentralization, and larger populations are more likely to benefit from science and technology fiscal expenditures. Additionally, moderation effect analysis reveals that environmental regulation substantially amplifies the supportive influence of science and technology fiscal expenditure in driving green innovation, suggesting that stronger environmental regulations can further augment the effect.
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