The threshold effect of environmental regulation in the nexus between green finance and total factor carbon...

This paper investigates whether the effect of regional green finance (GF) on total factor carbon productivity (TFCP) differs by the level of environmental regulation intensity. Using data of 30 provinces in China from 2008 to 2020, we measure green finance based on the entropy weight method. Then, we employ the Super-slacks-based measure (SBM) model that incorporates undesirable outputs to calculate TFCP. Further, based on a dynamic panel threshold model, we empirically investigate the relationship between GF and TFCP. The main conclusions are as follows: (1) a nonlinear relationship exists between GF and TFCP in China. Moreover, we are the first to take market-based environmental regulation (MER) and command-and-control environmental regulation (CER) as threshold variables. With MER and CER as threshold variables, there was a double-threshold effect between both GF and TFCP. Hence, when GF has a negative impact on TFCP, the government should consider reasonably adjusting environmental regulations to reap the full benefits of GF in terms of TFCP growth. (2) The heterogeneity analysis states that the nonlinear effect of GF on TFCP in different regions is still significant under the thresholds of MER and CER. Therefore, the government should implement flexible environmental regulation policies to make GF promote TFCP according to region's characteristics. This study provides a new perspective on the relationship between green finance and total factor carbon productivity.