Research on Environmental Regulation and Green Total Factor Productivity in Yangtze River Delta: From the Perspective of Financial Development

Jia Li, Decai Tang, Acheampong Paul Tenkorang and Zhuoran Shi
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Jia Li: College of Economics and Management, Nanjing University of Aeronautics and Astronautics, Nanjing 211106, China
Decai Tang: School of Law and Business, Sanjiang University, Nanjing 210012, China
Acheampong Paul Tenkorang: School of Management Science and Engineering, Nanjing University of Information Science & Technology, Nanjing 210044, China
Zhuoran Shi: Reading Academy, Nanjing University of Information Science & Technology, Nanjing 210044, China

IJERPH, 2021, vol. 18, issue 23, 1-24

Abstract: This paper employs the global Malmquist Luenberger (GML) index and the System Generalized method of moments (GMM) estimation method to investigate the influence of both environmental regulation and financial development on green total factor productivity in 41 cities of the Yangtze River Delta (YRD) in China from 2003–2019. We select the relevant input-output data to measure the green total factor productivity (GTFP) and its decomposition index including undesirable output. The results show that the GTFP and its decomposition index in the YRD have a slow fluctuating upward trend. The YRD mainly depends on improving the level of technological progress and environmental governance to promote the improvement of regional economic green development level. The empirical research results show that there is an inverted U relationship between environmental regulation and GTFP in the YRD, too strict environmental regulation will inhibit the growth of green total factor productivity. By adding control variables, the inflection point of environmental regulation is 0.5034, which is lower than that without control variables. There is a strong interaction and superposition effect between financial development and environmental regulation, which is closely related to the established financial cooperation mechanism, perfect financial system arrangement and cross-regional financial cooperation platform in the YRD. Government intervention should be reduced, the introduction of foreign capital should be controlled appropriately, foreign capital should be guided to green industries, and the use efficiency of foreign capital should be improved. This paper holds that we should pay attention to the strength of environmental regulation, prevent overcorrection, increase the guidance of credit funds, deepen the reform of the financial system, appropriately intervene in the market by the government, strengthen the guidance of foreign capital, and promote the development and transformation of the green economy in the YRD region with the help of several policies.

Keywords: environmental regulation; green total factor productivity; financial development; influence effect (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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