Green Finance, Innovation, and Financial Markets: Shaping Industrial Resilience in China and Europe

Xi Chen (), Adnan Khurshid (), Alexandru Răzvan Topa () and Radu Alexandru Budu ()
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Xi Chen: School of Mathematical Sciences, Xingzhi College, Zhejiang Normal University, Jinhua, Zhejiang, China.
Adnan Khurshid: School of Economics and Management, Zhejiang Normal University, Jinhua, Zhejiang, China.
Alexandru Răzvan Topa: Bucharest University of Economic Studies, Bucharest, Romania
Radu Alexandru Budu: Bucharest University of Economic Studies, Bucharest, Romania

Journal for Economic Forecasting, 2025, issue 1, 165-179

Abstract: This study examines the impact of green finance (GF), industrial innovation (II), and financial market dynamics (FMD) on industrial resilience (IR) in China and selected European industrialized nations. Panel data from 2003 to 2022 is utilized for empirical analysis. The study used FMOLS regression techniques to control for unobserved heterogeneity across countries. Similarly, GMM estimation is employed to address endogeneity concerns and validate the outcomes. This study proposes three empirical models for achieving its objectives. The models include a baseline model evaluating direct impacts, an interaction model investigating moderating connections, and a region-specific model comparing China with Europe. Findings reveal that GF, II, and FMD significantly enhance IR. Interaction effects indicate that the combined impact of GF and II, GF and FMD, and II and FMD also positively influence IR in the selected panel. Further examination of the regional comparisons reveals that while FMD is more substantial in Europe, China achieves more from GF and II. These results confirm the hypotheses of the study and highlight the importance of financial structures and policy frameworks in shaping industrial resilience. The study further recommends stronger financial market integration with sustainability initiatives in China and increased support for innovation in Europe.

Keywords: Industrial Resilience; Green Finance; Industrial Innovation; Financial Market Dynamics; Regional Comparison (search for similar items in EconPapers)
JEL-codes: G15 O31 Q56 (search for similar items in EconPapers)
Date: 2025
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