EFFECT OF GREEN FINANCE ON REGIONAL ECONOMIC DEVELOPMENT: EVIDENCE FROM CHINA

In response to the severe challenges brought by environmental issues, many countries have actively explored green finance practices. The main purpose is to explore the influence of green finance on the economy from the national and regional levels. Using panel data of 30 provinces in China from 2008 to 2019, the theoretical mechanism of green finance on regional economic development (RED) is clarified. Then, the index of green finance development and the comprehensive index of RED level which portray economic development activities are constructed. Finally, the panel model is used to empirically test the sub-dimension and sub-regional effects. Results indicate that green finance can optimize the allocation of resources, improve the comprehensive level of economic development, and promote the quality of economic development at the entire level. Results are confirmed to be reliable after robustness testing. In terms of mechanism, green finance plays its role by improving economic benefits, enhancing people's welfare, optimizing economic structure, promoting innovation and development. Notably, the effect is negative in terms of resources and the environment. Further study indicates that the influence of green finance differs in China's different regions. Specifically, it is stronger in the western region than in the central and eastern regions. The findings have an important reference for grasping opportunities, innovating green finance policies, and comprehensively improving high-quality economic development in the new era of the world.