The Impact Of Financial Development On Carbon Emissions In China

Exploring the interrelationship between China’s financial development and carbon emissions,and clarifying the impact of financial development on carbon emissions is very important for better formulating financial policies and realizing sustainable development of low-carbon economy.This thesis selects the annual data of China and its 30 provinces(excluding Tibet,Hong Kong,Macao and Taiwan)from 1997 to 2016 to explore the impact of China’s financial development on carbon emissions.This thesis estimates the carbon emissions,and uses entropy method to build a comprehensive index reflecting the level of financial development.The empirical analysis of this thesis is mainly divided into two parts.First,we estimate the time series linear static model and the time series ARDL model to explore the long-term and short-term relationship between China’s overall financial development and carbon emissions.Then the panel linear static model and panel ARDL model are estimated to explore the long-term and short-term relationship between financial development and carbon emissions in China and other regions.In panel analysis,this thesis introduces a two-dimensional panel framework to group provinces.The results of time series ARDL model show that,for China as a whole,there are weak emission reduction effects in financial development,no matter in the long-term effect or in the short-term effect.The results of panel ARDL model show that the financial development coefficients of the five panels are consistent,and also support the previous conclusion that in the long-term and short-term effects,the improvement of financial development level can inhibit carbon emissions and improve environmental performance.In addition,the absolute value of the estimated coefficient of financial development in the long-term effect is significantly greater than that in the short-term effect.To a certain extent,it can be confirmed that the impact of financial development on carbon emission reduction has a lag effect and has both positive and negative effects.At last,this thesis puts forward some policy recommendations,such as improving our financial market,implementing financial policies according to local conditions,and reasonably improving the level of financial development.