Breaking carbon lock-in: the role of green financial inclusion for China

This article evaluates the composite index of carbon lock-in (CLI), and then examines whether green financial inclusion (GFI) can help to explain the pace of CLI in 283 Chinese cities for the period 2010-2017. We also conduct four heterogeneous analyses, and detect the asymmetric, threshold, and mediating effects in the GFI-CLI nexus. The primary findings reveal that: (1) GFI plays a significant role in CLI abatement; (2) the restraining effect of GFI on CLI is more significant in eastern China, first-tier cities, non-resource-based cities, and capital cities; (3) GFI shows an asymmetric correlation with CLI at various quantiles. Moreover, internet penetration would enhance such a negative relationship; (4) GFI has an indirect acceleration effect of eliminating CLI through the channels of innovation, government support, and development of the digital economy. Following the above findings, we propose some suggestions related to climate change mitigation and GFI evolution.