Author:
S Payal,Chun Chin,Pant Kumar
Abstract
This research delves into the impact of green finance on carbon emissions in India, emphasizing the optimization of energy consumption. The study initiates by exploring the theoretical framework to comprehend how green finance influences carbon emissions, examining the role of energy consumption in this context. To empirically assess this influence, the paper utilizes the STIRPAT model, a chain multiple mediation effect model, and a panel threshold model, utilizing provincial data from India covering the period 2017 to 2022. The findings consistently demonstrate a significant reduction in carbon emissions attributable to green finance, a conclusion upheld even after considering potential endogeneity. Analysis of regional differences highlights a particularly pronounced inhibitory effect in northern, high-carbon emission, and energy-rich regions. Bootstrap tests at the national level reveal three distinct pathways through which green finance curtails carbon emissions: through green technological innovation, the ecological evolution of the industrial structure, and the synergy between green technological innovation and the ecological evolution of the industrial structure. Notably, in energy-rich regions, green finance significantly mitigates carbon emissions through all three pathways, whereas in energy-poor regions, its impact is predominantly linked to green technological innovation.
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