The Threshold Effect of China’s Financial Development on Green Total Factor Productivity

Abstract

Using the slacks-based measure (SBM) directional distance function and constructing the Luenberger productivity index, we measure the green total factor productivity (GTFP) of China’s provinces under resource and environmental restrictions. At the same time, based on the provincial panel data, the threshold regression method is used to empirically analyze the impact of financial development on green total factor productivity and its threshold effect. The study explores how technological innovation, foreign direct investment (FDI), and environmental governance affect green total factor productivity, as well as how financial development plays a role in the direction and intensity of the impact, with a view to providing policy recommendations for promoting green economic development. The results show that: (1) during the sample period, China’s green total factor productivity had an overall upward trend, and pure technological progress was the main reason for the growth in the green all-factor growth rate; (2) taking financial development as a threshold dependent variable, financial development had a nonlinear, double-threshold effect on green total factor productivity and diminishing marginal efficiency; (3) the increase in financial development will help attract high-quality and low-pollution FDI inflows, and can exert a technology spillover from FDI to green total factor productivity; (4) the impact of technological innovation on green total factor productivity has a nonlinear feature, with significant positive and increasing marginal efficiency; and (5) there is a positive “U” relationship between environmental governance and green total factor productivity.

Towards sustainable development: How does technological innovation drive the increase in green total factor productivity?

“…They find that technological progress can significantly contribute toward GTFP development through existing environmental regulations. Zhou et al (2019) also measures Chinese provinces' GTFP and confirms how technological innovation affects it; they find that the effect of technological innovation on GTFP is nonlinear, with positive and increasing marginal efficiency. Chen, Lan, Gao, and Sun (2018) use a dynamic panel data model, and found that compared with technology introduction, independent research and development has a significant driving effect on GTFP.…”

“…Moreover, Xin and Qu (2019) analyze the impact of smart city policies on the GTFP in the context of urban development patterns; they also use the SBM index to calculate GTFP growth. Li and Liu (2017) use SBM to analyze the spatial pattern evolution of GTFP for 108 cities in the Yangtze River Economic Belt in 2003–2013, and Zhou et al (2019) estimate the GTFP of China's provinces under resource and environmental restrictions using the SBM DDF and Luenberger productivity index.…”

“…FDI accelerates international economic integration, facilitates the transference of technology, promotes international trade between countries, and boosts economic development. According to several empirical studies, FDI is predicted to positively influence GTFP (Bitzer & Görg, 2009; Tao, Zhang, Hu, & Duncan, 2017; Zhou et al, 2019).…”

Spatial-Temporal Characteristics of Agriculture Green Total Factor Productivity in China, 1998–2016: Based on More Sophisticated Calculations of Carbon Emissions

“…are often measured by carbon emissions and will threaten human survival and development. Therefore, we should take environmental pollution into account to comprehensively measure the development of China’s agriculture [8].…”

Spatial-Temporal Distribution Characteristics and Driving Mechanism of Green Total Factor Productivity in China’s Logistics Industry

“…Rahman and Salim [18] analyzed 6 main influencing factors of agricultural GTFP in Bangladesh. Moreover, fiscal decentralization, international policies and fiscal development are also major factors affecting GTFP [19][20][21]. However, there is still a lack of research on the driving factors of GTFP in the logistics industry.…”