Can Green finance, green technologies, and environmental policy stringency leverage sustainability in China: Evidence from Quantile-ARDL estimation.

Abstract

Abstract The prime objective of this study is to examine empirically the role of green finance, eco-innovation, and environmental policy stringency to leverage sustainability in China. In doing so, the current study employs the novel QARDL approach using annual data ranging from 2000 to 2017. The study's findings support the existence of a heterogeneous association between the proposed variables. Precisely, the results of QARDL estimation demonstrate that there is a negative association between eco-innovation and ecological footprints; however, the extent of the relationship is quantile dependent. We also discovered an asymmetric negative and significant relationship between green finance and ecological footprints, with findings indicating that a 1% increase in green finance at low quantiles can reduce ecological footprints by 1–4%. However, a 1% increase in green finance at extreme high quantiles leads to a 7% decrease in ecological footprints. Also, for environmental policy stringency, we confirmed that a 1% increase in environmental policy stringency at high quantiles results in a 5–8% reduction in ecological footprints. Finally, the current study offers policymakers helpful suggestions on how to enhance the positive effects of environmentally supported innovation, green finance and stringent environmental policies on the ecosystem.