Financial Development and Environmental Regulations: The Two Pillars of Green Transformation in China

• Main Authors: Cong Li, Xihua Liu, Xue Bai, Muhammad Umar
• Format: Article
• Language: English
• Published: MDPI AG 2020-12-01
• Series: International Journal of Environmental Research and Public Health
• Subjects: China; environmental regulation; financial development; green technological progress; Shandong
• Online Access: https://www.mdpi.com/1660-4601/17/24/9242

Awareness of the influence of environmental regulations and financial development on green technological progress by Chinese enterprises will help to promote the green transformation of China’s economy, thereby comprehensively enhancing the quality and competitiveness of its economic development. This paper constructs a theoretical framework to analyze environmental regulation, financial development, and green technological progress and studies the relationship among these three indicators using 2004–2018 data from Shandong province. The results show that environmental regulations and financial development both play roles in promoting green technological progress, but as environmental regulation becomes stronger, the effects of finance on green technological progress begin to differ across regions. The results partially verify the applicability of the Porter hypothesis in China, providing a reference for all levels of government to formulate scientific and reasonable environmental rules and policies.