Green credit and low-carbon development in China: Fresh evidence on spatial spillover insights

The promulgation and execution of green credit (GC) policies have had a significant influence on the development of the economy and society, and their impact on low-carbon development (LCD) needs to be taken seriously. On the basis of elaborating the mechanism of the role of GC on LCD, this study constructs a panel fixed effects (FE) model to test the direct impact of GC on LCD by using Chinese provincial-level data from 2007 to 2020. An intermediary effect model is constructed to investigate its indirect effects. A dynamic SDM is further constructed to examine the spatial effects of GC on LCD in neighbouring regions. The results show that GC is helping China to achieve LCD. GC can promote LCD through promoting green innovation, optimizing energy structure and upgrading industrial structure. It is crucial to acknowledge that all three pathways are essential channels of influence and should not be disregarded. GC not only fosters LCD in the local areas, but also has a positive spatial spillover effect in adjacent regions. Based on the above conclusions, this study proposes policy recommendations such as increasing support for GC, smoothing the transmission channel from GC to LCD, and establishing a synergistic linkage mechanism between interregional credit and environmental governance. This study provides valuable insights for China to realize LCD, as well as for other countries to actively engage in energy conservation and emission reduction efforts.