Green gospel effect of regional financial expansion: evidence from urban commercial banks in China

The regional financial expansion represented by the development of regional small and medium-sized banks, such as urban commercial banks, is an essential factor affecting the environmental behavior of enterprises. We found that both the marginal expansion and the scale expansion of regional finance help reduce the sulfur dioxide emission intensity and improve the environmental performance of enterprises, indicating a green gospel effect of regional financial expansion. In terms of the impact path, regional financial expansion cannot only reduce the sulfur dioxide generation intensity and improve the front environmental performance of enterprises, but also increase the sulfur dioxide removal intensity as well as improve the terminal environmental performance. However, in the context of high fiscal pressure on local governments, regional financial expansion exacerbates sulfur dioxide emission and generation intensity of enterprises, worsening environmental performance and creating a green curse effect. Further study finds that the cross-regional expansion of urban commercial banks can strengthen the green gospel effect; the improvement of enterprises’ environmental performance by regional financial expansion is mainly found in polluting industries and non-SOEs.