Green finance, environmental pollution and high-quality economic development—a study based on China’s provincial panel data

Under the new normal, green finance is inevitably linked to high-quality economic development in China. Based on 30 province panel data sets from China from 2010 to 2019, this research employs an innovative spatial econometric model to integrate green finance, environmental pollution and high-quality economic development into a unified empirical analysis framework. Regional green finance and high-quality economic development have spatial spillover effects in China, according to spatial auto-regressive and spatial error model tests, with the eastern region leading, the central region running in parallel and the western region chasing, because of a strong moderating effect in the eastern region. Green finance contributes greatly to high-quality economic development, but increased environmental pollution impedes high-quality economic development. Green financing can help to mitigate the detrimental effects of pollution on high-quality economic development. According to the mechanism of action analysis, green finance reduces pollution by modifying the industrial structure and boosting scientific and technological growth. Finally, the green finance threshold test demonstrates a nonlinear impact on economic quality development after passing a specified threshold value and has a strong threshold characteristic. This research has policy implications since it improves understanding of the dynamics of high-quality economic development as well as the benefits, mechanisms and heterogeneity of green finance in reducing pollution and empowering high-quality economic development.