The Impact of Green Finance on Investment Returns of Real Economy

Abstract

As China enters a new era of development, the importance of ecological environment and sustainable development is becoming increasingly prominent. Green finance (GF), compared with traditional finance, can better promote environmental protection and sustainable development. Starting from the mechanism of the impact of GF on the return on investment (ROI) of real economy, this paper analyzes the regulatory effects of marketization and government intervention, and then empirically examines the relationship between GF and the ROI of real economy in 30 provincial-level administrative regions of China from 2007 to 2020. The main findings of this paper are: Firstly, GF can improve the ROI of real economy, and marketization and government intervention play a promoting and inhibitory regulatory role respectively. Secondly, the study found that GF has a significant promoting effect on the ROI of real economy in the eastern region, while it has not yet shown a significant improvement in the ROI of real economy in the central and western regions. Finally, the role of GF in promoting the ROI of real economy has become more significant after 2012, and green finance has no significant effect on return of investment of real economy before 2012. This paper provides a useful reference for how to achieve effective connection between GF, marketization and industrial demand, and formulate GF policies suitable for actual conditions.