The Nexus between Green Finance and Carbon Emissions: Evidence from Maturity Mismatch in China

Xiuli Liu (), Jing Cui, Yanrui Wu, Xiaohang Yue, Jun Shen and Pibin Guo
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Xiuli Liu: Research Institute of Resource-Based Economics, Shanxi University of Finance & Economics, Taiyuan 030006, China
Jing Cui: Research Institute of Resource-Based Economics, Shanxi University of Finance & Economics, Taiyuan 030006, China
Yanrui Wu: Business School, University of Western Australia, Crawley, WA 6009, Australia
Xiaohang Yue: Lubar School of Business, University of Wisconsin Milwaukee, Milwaukee, WI 53201, USA
Jun Shen: Research Institute of Resource-Based Economics, Shanxi University of Finance & Economics, Taiyuan 030006, China
Pibin Guo: Department of Management, Shanxi Institute of Economics Management, Taiyuan 030006, China

Sustainability, 2024, vol. 16, issue 10, 1-24

Abstract: Green finance has been widely acknowledged as a pivotal instrument for mitigating carbon emissions. However, few studies have focused on the role of maturity mismatches in promoting carbon emission reduction through green finance. This study aims to develop a composite criterion for green finance and examine the mechanism of how green finance affects carbon emissions via the new perspective of maturity mismatch. It is accomplished by applying a two-way fixed effects model which incorporates provincial data spanning from 2010 to 2020. The empirical evidence suggests green finance plays a significant role in carbon emission reduction, a result that remains robust even after undergoing other tests such as using instrumental variables and alternating econometric models. Furthermore, this effect is particularly pronounced in regions with high degrees of green finance and low energy consumption. Mechanism analysis documents that green finance reduces carbon emissions by addressing maturity mismatch issues faced by green enterprises. Further research finds that green finance can promote the synergy of pollution and carbon reduction; in particular, the effect of maturity mismatch on SO 2 reduction is more obvious. Consequently, this study offers practical recommendations for governments, financial institutions, and other relevant policymakers to further propel the advancement of green finance.

Keywords: green finance; carbon emission reduction; maturity mismatch; China (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
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