The role of direct financing on regional green development: inhibition or promotion?

Environmental and social responsibility has become aspect of the new definition of China's economy, and the direction of green development has been further clarified. As the financial system is the lifeblood of a substantial economy, the Chinese government proposed to increase the proportion of direct financing, match the financial structure with green innovation, and promote green economic growth. Examining the institutional framework in China from 2004 to 2020, this study empirically investigates the effect of direct finance on regional green development applying moderating effect and spatial error models to three time spans. The findings reveal significant spatial differences in China's direct financing and regional green development, with a positive impact in central and western regions and a significant negative impact in the eastern region. Finally, under the institutional environment, direct financing in the eastern region significantly promotes the regional green development. Our research provides new insights to advance sustainable green economic development in China through action to strengthen the institutional environment. [ABSTRACT FROM AUTHOR]