Does the depth of the Financial Markets matter for establishing Green Growth? Assessing Financial sector’s potency in decoupling Economic Growth and Environmental Pollution

Abstract

China’s 2060 carbon neutrality agenda requires implementation of policies that can decouple its economic growth from environmental pollution. Consequently, establishing green growth in the Chinese economy is of utmost significance. Against this milieu, this study questions whether the depth of Chinese financial markets matters for establishing green growth in China. Besides, the green growth effects of renewable energy use, technological innovation, and urbanization are also examined. Accordingly, quarterly frequency data from 1990Q1 to 2020Q4 are utilized to perform econometric tests that accommodate structural break concerns in data. Overall, the findings reveal that the depth of the Chinese financial markets facilitates the prospects of greening the Chinese economy. Notably, deepening of financial markets is seen to initially inhibit green growth while stimulating it later on; thus, the financial markets’ depth-green growth nexus is evidenced to depict a U-shape. On the other hand, green growth in China is also found to be catalyzed by the renewable transformation of the Chinese energy sector and through technological innovation in the long-run. Conversely, urbanization is witnessed to inflict anti-green growth impacts. Furthermore, the causality analysis verifies bi-directional causal associations between renewable energy use and green growth while unidirectional causalities running from financial markets' deepening, technological innovation, and urbanization to green growth are also discovered. Therefore, it is recommended that China should try to persistently develop its stock and debt markets so that clean investment can be boosted to decouple economic growth and environmental pollution. Besides, it is also important to undergo renewable energy transition, develop clean technologies, and design low-energy urbanization strategies.

Factors That Influence the Intention of Smallholder Rice Farmers to Adopt Cleaner Production Practices: An Empirical Study of Precision Agriculture Adoption

“…This implies a need for policymakers to consider enhancing the exposure of supporting policies to all farmers to provide for effective practical application of PA technologies. Easier access to finance, which is facilitated by the government, was shown as important in determining the adoption of and transition to clean technologies by Yuan et al (2022) .…”

Unveiling urban marathon development characteristics and urban growth strategies in China: Insights from time series analysis of Baidu Search Index

“…Focusing on the developmental traits of Chinese city marathons symbolizes a step forward in understanding the development characteristics and optimization paths of Chinese sports tourism, thereby opening new avenues for urban development models. Time series, a prevalent form of high-dimensional data associated with time, such as stock data [1,2], financial data [3,4], has grown dramatically with the progression of social economics and information technology. Leveraging data mining technology to scrutinize the popularity time series data of Chinese city marathons stands as a compelling method to uncover potential useful insights in marathon events.…”

Do smart services promote sustainable green transformation? Evidence from Chinese listed manufacturing enterprises

“…Governments around the world are expected to achieve environmentally sustainable economic growth by adopting policies that promote green economic activities. Some have achieved positive results, such as financial market deepening, trade openness and globalization [ 4 – 6 ]. However, some studies suggest that economic activities may have negative effects on sustainable development [ 7 , 8 ].…”