Dynamic spatial spillover effects of financial agglomeration on CO2 emissions: the case of China

Jun Wan, Chenggang Li, Zhangting Yang, Liang Wu and Mu Yue ()
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Jun Wan: Nanjing University of Information Science & Technology
Chenggang Li: Guizhou University of Finance and Economics
Zhangting Yang: Guizhou Modern Urban Rural Economic Development Research Institute
Liang Wu: Guizhou Normal University
Mu Yue: Nanyang Technological University

Palgrave Communications, 2025, vol. 12, issue 1, 1-13

Abstract: Abstract Research on the impact of financial agglomeration on CO2 emissions is a vital avenue for advancing CO2 emissions reduction and aligning with the Sustainable Development Goals set forth by the United Nations. However, few studies have investigated the dynamic spatial spillover effect of financial agglomeration on CO2 emissions, and the concepts of “time inertia” and “spatial spillover effect” about CO2 emissions have received limited attention. To address this gap, we used provincial panel data from 30 provinces in China from 2006 to 2019. We employed the entropy method to measure the level of financial accumulation, constructed a dynamic spatial Durbin model, and analyzed the “time inertia” and “spatial spillover effects” of CO2 dioxide emissions in Chinese provinces. Additionally, we explored the dynamic spatial spillover effects of financial agglomeration on CO2 emissions. We examined the transmission mechanism of the impact of financial agglomeration on CO2 emissions through energy consumption and technology market development. The results show that CO2 emissions exhibit significant “time inertia” and “space spillover” effects and considerable regional differences. Financial agglomeration levels positively impact reducing CO2 emissions in the short and long term. Through two intermediary paths of energy consumption and technology market development, financial agglomeration can indirectly reduce CO2 emissions. Our research effectively provides information and serves as a decision-making reference for policy planning related to CO2 emissions reduction, especially in countries with high CO2 emissions, particularly developing nations.

Date: 2025
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DOI: 10.1057/s41599-025-04455-1

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