Can Green Credit Contribute to Sustainable Economic Growth? An Empirical Study from China

Abstract

Green development is an inevitable trend of sustainable development: how does it affect green economic growth as the main channel of green project financing and the core force of building a green financial system? The present article measures the relationship between green credit and sustainable economic growth using a benchmark regression analysis model and explores the main influencing factors and regional characteristics that affect the coupling development of green credit and sustainable economic growth by combining mechanism and heterogeneity tests. The results of the study show that: (i) Green credit has a significant positive contribution to sustainable economic growth. (ii) In terms of the transmission mechanism, industrial upgrading and environmental regulation have a significant impact on sustainable economic growth. (iii) In terms of heterogeneity, the effect of green credit on sustainable economic growth is the most pronounced in the west, followed by the central and eastern regions of China. The policy implications of this study are that green credit in China is an inevitable trend, and that a sound policy supporting the legal system and information communication mechanisms should be promulgated to ensure the effective allocation of resources, thereby promoting the coordinated, sustainable and stable development of environmental protection and the economy.