The Impact Of Financial Development On Ambient Air Quality

Since the eleventh third plenary meeting of the Central Committee of the Communist Party of China decided to implement the Economic Reform and open up policy in 1978,China has achieved world renowned achievements in economic construction,but the extensive economic growth pattern of high pollution and high energy consumption has made environmental problems increasingly serious.Driven by China's strong economic growth for more than 30 years,China's carbon dioxide emissions have grown rapidly.Since 2005,China's total carbon dioxide emissions havesurpassed that of the United States to the top of the world.By2012,China's total carbon dioxide emissions have been equivalent to the total emissions of the United States andEurope.The emission of greenhouse gases such as carbon dioxide is not only a problem faced by China,but also one of the major problems faced by the world.The massive emission of carbon dioxide is one of the basic reasons of global warming and environmental degradation.In addition to the increase in carbon dioxide emissions,the extreme haze(PM2.5)that has occurred frequently in China in recent years has aroused public concern.This paper expands the standard Cobb-Douglas production function by introducing financial development variables to clarify the relationship between financial development and economic development.Based on panel data from 30 provinces in China from 1998 to 2016,the paper explores the relationship between financial development and ambient air quality indicators,the model contains quadratic and cubic terms of financial development to explore the relationship between financial development and carbon dioxide emission intensity and haze(PM2.5)concentration.Through empirical research,it is found that the overall impact of financial development on ambient air quality is an inverted "U" type function,indicating that the impact of financial development on ambient air quality is first promoted and then suppressed.Based on the empirical results,to promote the improvement of environmental air quality in financial development,the following recommendations are given.First,China should continue to actively introduce foreign capital and continue to accept the advanced clean technologies and concepts brought by foreign companies,and strengthen cooperation with developed countries in low-carbon industries.Second,China should vigorously encourage the growth of energy-efficient industries such as services and high-tech industries,accelerate the transformation of industrial structure,and reduce dependence on low energy-efficient manufacturing.At the same time,China should consider stricter environmental and energy policies,such as introducing a tax system for ambient air pollutant emissions to reduce ambient air pollutant emissions.Meanwhile,R&D expenditures for reducing ambient air pollutant emissions should be strengthened.For example,research and investment in clean energy should be an integral part of the process of controlling ambient air pollutant emissions.Finally,some inherent defects of the Chinese financial system should also be corrected.The unreasonable financial resource allocation system should be reformed as soon as possible for the benefit of China's sustainable economic growth and environmental conditions.