The effects of green finance on pollution and carbon reduction: Evidence from China's industrial firms

Reducing pollution and carbon emissions is important but requires a large amount of capital. Green finance is becoming an important market-based instrument. Few literatures have focused on the direct impact of green finance on corporate environmental performance. This study investigates the effects of green finance on air pollution and carbon reduction in China's industrial firms from 2008 to 2015. Results show that green finance promotes CO2 and air pollution reduction. Moreover, green finance has a synergistic effect on SO2 and carbon reduction, but not on reduction of dust and carbon emissions. Our findings suggest that green finance reduces emissions by improving corporate energy utilization efficiency. Furthermore, we find that the effects of green finance on emission reduction are more significant among non-state and non- listed firms. These findings have important implications for the development of green finance and synergistic reduction of air pollutants and carbon.