Green finance and innovative cities: Dual-pilot policies and collaborative green innovation

• Published in: International review of financial analysis Vol. 96; p. 103673
• Main Authors: Hou, Guanchong, Shi, Guifen
• Format: Journal Article
• Language: English
• Published: Elsevier Inc 01-11-2024
• Subjects: Green finance reform and innovation pilot zones; Green innovation; Innovative city pilots; Time-varying DID model; P34; Q55; Time-varying DID model; O38; G38; Innovative city pilots; Green innovation; Green finance reform and innovation pilot zones
• ISSN: 1057-5219
• DOI: 10.1016/j.irfa.2024.103673

As the impacts of climate change intensify, urban green innovation has emerged as a critical technological approach for reducing carbon emissions and addressing climate-related risks. In this study, we analyze data from 282 prefecture-level cities in China from 2007 to 2020. Using the time-varying difference-in-difference model, we examine the underlying mechanisms of how green finance and urban innovation policies synergistically drive urban green innovation. Our findings reveal that the dual-pilot policies, namely, Green Finance Reform and Innovation Pilot Zones and Innovative Cities Pilots, have significantly boosted green innovation by leveraging the resource allocation effect. Further research shows that the green innovation is more effective in the central and eastern regions, cities facing resource decline, cities regenerating resource-, and rust-belt areas during the dual-pilot policy implementation process. Moreover, these dual-pilot policies demonstrate a synergy of “1 + 1 > 2.” These results offer fresh insight into further deepening urban policy pilot initiatives.
•We investigate the impact of the GFRI and the ICP, which have markedly enhanced the efficacy of green innovation.•This positive green innovation effect is attribute to the resource allocation channels involving financial capital and human capital.•Heterogeneity is observed with respect to geographical location, resource abundance, and the level of industrialization.