Do green finance and green innovation foster environmental sustainability in China? Evidence from a quantile autoregressive-distributed lag model

The world is facing problematic environmental conditions due to ongoing global warming. Attempts to deal with environmental challenges have increased the importance of green policy measures, of which green finance and green innovation are crucial strategies. The present study contributes to the literature by investigating the role of green finance and green innovation in achieving environmental sustainability in China. A quantile autoregressive-distributed lag (QARDL) model was used, as it depicts the causality pattern on annual time series data from 2000 to 2019, with empirical outcome confirming that green finance and green innovation play a substantial role in reducing CO2 emissions. We found that economic growth stimulates environmental degradation by contributing to CO2 emissions, and renewable energy can contribute to achieving environmental sustainability. These empirical findings support relevant policy insights for sustaining green finance and green innovation in China in order to ensure environmental sustainability.