Green Credit and Total Factor Carbon Emission Performance-Evidence from Moderation-Based Mediating Effect Test

Area of Science:

• Environmental Economics
• Sustainable Finance
• Climate Policy Analysis

Background:

• China's dual carbon goals necessitate simultaneous emission reduction and high-quality economic development.
• Green credit (GC), integrating environmental regulation and economic leverage, is crucial for improving total factor carbon emission performance (TFCEP).

Purpose of the Study:

• To analyze the transmission path and impact of Green Credit (GC) on Total Factor Carbon Emission Performance (TFCEP) in China.
• To investigate the mediating effects of industrial structure and green technology innovation, and the moderating effect of government quality.

Main Methods:

• Utilized panel data from 30 Chinese provinces and municipalities (2001-2020).
• Constructed and applied a series of panel models to examine the relationship between GC and TFCEP.
• Analyzed mediating and moderating effects within the transmission mechanism.

Main Results:

• An inverted U-shaped relationship was observed between GC and TFCEP, indicating initial improvements followed by diminishing returns.
• Industrial structure advancement and green technology innovation significantly mediate the GC-TFCEP relationship.
• Government quality moderates the second stage of the mediation process; GC's restraining effect on TFCEP is more pronounced in central and western China at scale.

Conclusions:

• Increasing the scale of GC is significant, but requires strategic implementation to avoid diminishing returns and regional disparities.
• Promoting clean energy industrial structure and enhancing green technology innovation are vital for maximizing GC's positive impact on TFCEP.
• Policy interventions should consider regional characteristics and the interplay between GC and other environmental regulations.