Green Value from Technology Finance Policies Towards Sustainability: Evidence of a Quasi-Natural Experiment on Urban Carbon Reduction in China

Jiaji An, Hongyuan Bi, He Di (), Jingze Lin and Xinran Zhao
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Jiaji An: School of Finance, Jilin University of Finance and Economics, Changchun 130117, China
Hongyuan Bi: School of Economics and Management, North China Electric Power University, Beijing 102206, China
He Di: School of Business and Management, Jilin University, Changchun 130015, China
Jingze Lin: Jilin Economic Research Center, Jilin University of Finance and Economics, Changchun 130117, China
Xinran Zhao: School of Finance, Jilin University of Finance and Economics, Changchun 130117, China

Sustainability, 2025, vol. 17, issue 18, 1-23

Abstract: Innovation can balance environmental objectives while enhancing economic efficiency. However, its policy dimension has largely been overlooked. Leveraging financial instruments to promote technological innovation has become a primary policy tool. This study treats China’s pilot policies on technology finance integration as a quasi-natural experiment and constructs a multi-period difference-in-differences model with 5434 panel datapoints from 286 cities between 2005 and 2023. Within the environmental Kuznets curve theoretical framework, we examine the impact of technology finance policies on urban carbon emissions. The findings reveal that these policies significantly curb urban carbon emissions. Heterogeneity analysis shows stronger effects in large, non-resource-dependent eastern cities than in others. Mechanism tests indicate that these policies primarily generate green value through technological innovation and industrial structure upgrading, with the latter demonstrating a significantly stronger effect than the former. Our findings regarding the outstanding role of industrial structure upgrading may challenge and reorient the literature’s general focus on green technologies. This study employs economic principles to offer new insights into innovation’s effective balancing of economic growth and sustainability, broadening discussions about the green value of financial policy tools.

Keywords: technology finance policies; urban carbon reduction; sustainability development; difference-in-differences model; technological innovation; industrial structure upgrading; environmental economics (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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