Title: Carbon emission efficiency and foreign direct investment: the role of green financial development

Authors: Xin Guo; Jiang Wang

Addresses: Business School, University of Shanghai for Science and Technology, Shanghai 200093, China ' Business School, University of Shanghai for Science and Technology, Shanghai 200093, China

Abstract: Prevailing research suggests foreign direct investment (FDI) significantly impacts carbon emission efficiency (CEE) of the host country. However, the contribution of FDI may depend on the level of green financial development in the host country. This study examines the role of green financial development in the relationship between FDI and CEE. Based on panel data from 30 provinces in China from 2005 to 2019, we construct the system generalised method of moments (GMM) model and a dynamic threshold effect model to investigate how green financial development influences the impact of FDI on the CEE of the host country. The findings suggested that green financial development plays a moderating role in the impact of FDI on CEE. But only when it reaches a certain level can FDI significantly promote CEE. The empirical analysis suggests that policymakers should build a multilevel green financial system to allocate financial resources and maximise the spillover effects of FDI.

Keywords: foreign direct investment; FDI; carbon emission efficiency; CEE; green financial development; generalised method of moments; GMM.

DOI: 10.1504/IJIMS.2024.140233

International Journal of Internet Manufacturing and Services, 2024 Vol.10 No.2/3, pp.242 - 267

Received: 29 Dec 2022
Accepted: 19 Mar 2023
Published online: 31 Jul 2024 *

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