The Effect of Financial Development on Industrial Green Technology Innovation Efficiency: Experience Analysis from 288 Cities in China

Abstract

Green industrial growth is at the core of the green and low-carbon transformation of the real economy. Financial services provide new channels for green innovation financing for enterprises. How to utilize financial development to enhance the industrial green technology innovation efficiency (GTIE) is the focus of this paper. Using data from 288 cities in China, this paper employs the Super-SBM model and the Network DEA model to measure the industrial GTIE and then investigates the complex relationship between financial development and industrial GTIE. The results show that, overall, financial development can promote the industrial GTIE. And alleviating enterprise financial constraints and increasing investment openness are effective pathways for this influence. In addition, we discuss the heterogeneous effects of financial development on industrial GTIE across different types of cities, manifested as a dual effect of “supporting” and “predation”. In regions with stronger financial power such as coastal and eastern cities, the “predation effect” is stronger, while the “support effect” is stronger in inland and central/western cities. Furthermore, the expansion of city size weakens the impact of financial development on industrial GTIE. This paper points out that financial development plays a crucial role in enhancing the industrial GTIE, but excessive financial power may crowd out the positive impact of financial development on the industrial GTIE. When promoting financial development, it should be matched with region development to avoid crowding out investment in green innovation by enterprises.