The impact of green finance on total factor carbon emission reduction efficiency in China

Based on an analysis of the relationship between green finance and total factor carbon emission reduction efficiency, this article measures the levels of green finance and total factor carbon emission reduction efficiency in 30 provinces and cities in China. It also establishes a spatial Durbin model to quantitatively explore the impact of green finance on China’s total factor carbon emission reduction efficiency. The results indicate that currently, green finance and total factor carbon emission reduction efficiency in China follow a distribution pattern of high in the east, medium in the central region, and low in the west. The impact of green finance on total factor carbon emission reduction efficiency demonstrates a U-shaped relationship, and the spatial spillover effect between the two displays a similar U-shaped trend. The mechanism analysis demonstrates that green finance exerts a U-shaped influence on the efficiency of reducing total factor carbon emissions through the interplay of technological progress and technical efficiency enhancements. Other variables, such as research and development investment, comprehensive energy consumption, human capital, infrastructure construction, and government regulation, also have an impact on total factor carbon emission reduction efficiency. Therefore, it is recommended that regions strengthen their green finance initiatives, support efforts to carbon emission reduction, and contribute towards achieving the “dual-carbon” goal.