How does green finance affect green total factor productivity? Evidence from China

While the literature has studied various factors affecting green productivity growth, there is a relative dearth of empirical studies quantitatively analyzing the linkage between green finance development and green productivity. Based on a comprehensive index of green finance development, this research thus employs panel data of 30 China's provinces for the period 2006–2018 to explore the influence of green finance on green total factor productivity, revealing estimation results that green finance development significantly improves the level of green productivity. This beneficial effect tends to be stronger in provinces with higher levels of economic and social conditions, less public participation in environmental protection, and high pollution levels. We also find that implementing a green finance policy can further enhance the impact of green finance development. The empirical results herein offer policy implications to China's green finance planning and environmental policy.