Study on the effect of green financial policies on low-carbon economic development based on evidence from green financial reform and innovation pilot zone

Green finance is key in supporting industries' green transformation and helping achieve low-carbon economic (LCE) development. This paper constructs an LCE development index using panel data from 30 provinces in China from 2011 to 2020. Based on the establishment of the first five pilot green finance zones in China in 2017 as a quasi-natural experiment, the synthetic control method (SCM) is applied to explore the impact of green finance policies on the level of LCE development and to analyze the mechanism and evaluate the policy effects. The empirical results show that (1) the synthetic analysis unit better fits the development trend before the implementation of the pilot. (2) After the implementation of the pilot reform, the level of LCE development in Zhejiang, Jiangxi, Guangdong, and Guizhou provinces has a more significant enhancement effect, but the enhancement in Xinjiang is not significant, which indicates that the reform effect in Zhejiang, Jiangxi, Guangdong, and Guizhou is significantly better than that in Xinjiang to a certain extent. (3) The samples were statistically significant and passed the placebo and ranking tests. Additionally, this paper analyzes the mechanism of policy effectiveness in terms of sci-tech innovation (STI) and energy consumption structure: green finance as a grip for economic transformation can provide financial support for regional STI and energy consumption structure upgrade and promote the capital flow to green low-energy industries, ultimately achieving sustainable economic development. Based on the above findings, policy insights can be provided for the improvement of green finance pilot regions.