Financial Development, Heterogeneous Technological Progress, and Carbon Emissions: An Empirical Analysis Based on Provincial Panel Data in China

Global warming, caused by an increase in carbon emissions, has attracted considerable attention worldwide. In addition, financial development affects technological progress and carbon emissions. Despite numerous works that explore the impact of financial development on technological progress and carbon emissions, few have integrated the three into a unified framework of research. To fill this gap, this study constructed a mediation effect model for empirical analysis based onthe provincial panel data of 30 provinces and cities in China from 2009 to 2021.Taking into account the regional differences across China, this study explored the impact of financial development on carbon emissions and the intermediary role that heterogeneous technological progress plays within. The results showed that at the national level, and in eastern and central China, the relationship between financial development and carbon emissions conformed to an inverted U, the environmental Kuznets curve, whereas in western China, carbon emissions were found to linearly increase with financial development. Among the variables of technological progress that served as mediators, generalized technology progress, environmental technology progress, energy technology progress, capital embodied technology progress, and FDI technology spillover were the transmission paths for the impact of financial development on carbon emissions at the national level. However, the effect of these variables of technological progress on the impact of financial development on carbon emissions varied among the different regions. This paper aims to provide some inspiration to reduce carbon emissions through financial development and prevent "one-size-fits-all" policies for technological advances or overall planning without considering regional differences.