Can green finance reduce carbon emission intensity? Mechanism and threshold effect

Against the background of carbon emission reduction, green finance (GF) has become a crucial financial instrument that promotes industrial transformation and low-carbon development. Although some scholars have explored the driving factors affecting the carbon emission intensity (CEI), there is a dearth of literature on the mediation and threshold effects of GF on CEI. Based on the panel data of 30 provinces in China during the period of 2004 similar to 2019, this study examined the direct, indirect, and threshold effects of GF on CEI by adopting the panel ordinary least squares, mediation effect, and threshold regression models, respectively. This study draws the following conclusions: GF can directly reduce the CEI. In addition, the scale economics effect and green technology innovation caused by GF have an inhibiting effect on the CEI. However, GF can promote the CEI through structural transformation. What's more, this study interestingly found that the effect of GF reducing CEI is dynamic and nonlinear. These findings can provide references for policy-makers who hope to accelerate carbon emission reduction and achieve low-carbon development.