How financial clustering influences China's green development: Mechanism investigation and empirical discussion

Understanding the significance of financial clustering in the context of green development holds immense importance for China as it strives towards achieving high-quality green development. Using a balanced panel dataset encompassing China's 283 cities from 2009 to 2020, we aim to explore the impact of financial clustering on green development from both linear and nonlinear perspectives. Empirical evidence suggests that when the level of financial clustering increases by 1%, the city-level green development increases by 0.1012%. A mediation effect model certifies that there are three essential channels through which financial clustering robustly boosts green development: technical, structural and scale effects. Subsequently, a novel program handling endogeneity is designed and verifies the nonlinear nexus between financial clustering and green development. Moreover, the spatial Durbin model demonstrates that financial clustering significantly sustains local green development, despite its relatively weak spill over effects. Heterogeneity analysis presents that the promoting effect is particularly predominant in Central China, as well as in cities characterized by high levels of financial clustering and large population sizes.