Explore the Complex Interaction between Green Investment and Green Ecology: Evaluation from Spatial Econometric Models and China’s Provincial Panel Data

Abstract

From the economic perspective, China has made remarkable progress, yet environmental concerns represent an alarm to the country’s long-term prosperity. The associated relationship between green investment and the green economy has important implications for the environment. Whether there is an interactive relationship between green investment and green ecology, current views seem to be at odds with each other. This paper employs a panel vector autoregressive model to construct an empirical analysis of China’s provincial panel data from 2005 to 2019. Specifically, generalized moment estimation, impulse response function, variance decomposition, and other measurement methods were applied to study the interaction between green investment and green ecological development. The research results show the following: (1) the inertial development of the green investment system seriously restricts the progress of green investment levels, and the long-term development of green ecology has a significant self-reinforcing trend; (2) the two-way interaction between green investment and green ecology shows a positive spillover effect in the short term, but the positive effect gradually weakens in the long run; (3) the impact of green ecology on green investment is most significant in the interactive relationship, and the positive effect of green ecology on green investment in the western region is the most prominent. Therefore, the government should standardize green investment standards and use policy guidance to promote the regional transfer of green investment and green ecological resources. Financial institutions should appropriately lower the financing threshold for polluting enterprises and municipal construction and leverage more social funds to flow into long-term green technologies and green industries. Companies should raise awareness of environmental disclosure, ban outdated production capacity, and transition to cleaner production models to secure green funding.

Analysis of the Impact of Green Investment on Corporate Financial Sustainability in West Java

“…The research findings highlight the significant and favorable impact of green investments and financing on corporate social responsibility (CSR) and sustainable business performance [31]. It is suggested that highly polluting chemical businesses should incorporate green financing, investment, and CSR to improve sustainable economic performance [38]. This study contributes to the literature by emphasizing the importance of each construct and providing insights into the challenges and opportunities faced by companies operating in emerging economies [39].…”