A Study of Spatial Spillovers from Fiscal Decentralization on the Efficiency of Green Economy—And the Moderating Role of Financial Decentralization

Haonan Chen and Xiaoyang Yang ()
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Haonan Chen: School of Economics, Capital University of Economics and Business, Fengtai District, Beijing 100070, China
Xiaoyang Yang: School of Economics, Capital University of Economics and Business, Fengtai District, Beijing 100070, China

Sustainability, 2024, vol. 16, issue 15, 1-21

Abstract: A robust fiscal and financial system constitutes a fundamental pillar of national governance. This paper investigates the spatial correlation between fiscal decentralization, financial decentralization, and local green economic efficiency using panel data from 285 cities in China. The findings reveal several key insights. First, fiscal decentralization hampers local green economic efficiency enhancement but exerts a “warning effect” on neighboring regions. In contrast, financial decentralization promotes local green economic efficiency and triggers a “clustering effect” on neighboring areas, indicating an agglomeration impact. Second, synergies from financial decentralization on local green economic efficiency are not immediately apparent, while they mitigate the enhancement of neighboring regions’ green economic efficiency. Third, the maturity of the financial market system and the completeness of infrastructure positively influence the impact of financial decentralization on green economic efficiency. Fourth, fiscal and financial decentralization significantly impacts green economic efficiency in the short term, yet their long-term effects are negligible. Consequently, this paper recommends enhancing infrastructure development and instituting a dynamic mechanism for adjusting fiscal and financial decentralization. Based on the aforementioned findings, this paper provides corresponding countermeasure recommendations. These recommendations not only contribute academically to the study of green efficiency from the perspectives of fiscal and financial decentralization but also offer a Chinese model for other developing countries seeking to balance fiscal, financial, and green sustainable development.

Keywords: fiscal decentralization; financial decentralization; green economy efficiency; spatial spillovers; dynamic adjustment mechanisms (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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