An Empirical Study on How Financial Development Influences Carbon Emissions in Yangtze River Delta

Abstract

Financial development influences economic development to some extent. China is in the important stage of economic restructuring and upgradation, while facing both the foreign and the domestic pressure of developing low-carbon economy and promoting energy conservation and emissions reduction, requiring people to understand the relationship between financial development and carbon emissions. This paper examines how financial development influences the carbon emissions using the panel data composed by 37 prefecture-level cities in Yangtze River delta during the 2008-2017 period. This paper build the multiple regression model based on modified environmental impact assessment model (EIA) and measure financial development level using the percentage of loan balance of financial institutions in GDP and the percentage of saving balance of urban residents in GDP. The result shows a negative association between financial development and carbon emissions among 37 cities in Yangtze River Delta. Therefore, the policymakers should try to maximize the supporting of financial institutions to local economies, develop green finance and promote the regional information sharing and cooperation.