Sohail, Ha iz M. e al.
A icle
Op imizing sus ainable high-quali y economic
de elopmen h ough G een Finance wi h obus spa ial
es ima ion
Cogen Economics & Finance
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Sugges ed Ci a ion: Sohail, Ha iz M. e al. (2024) : Op imizing sus ainable high-quali y economic
de elopmen h ough G een Finance wi h obus spa ial es ima ion, Cogen Economics & Finance,
ISSN 2332-2039, Taylo & F ancis, Abingdon, Vol. 12, Iss. 1, pp. 1-14,
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Op imizing sus ainable high-quali y economic
de elopmen h ough G een Finance wi h obus
spa ial es ima ion
Hafiz M. Sohail, Hossam Haddad, Mi za Ullah, Nidal Mahmoud Al-Ramahi,
Naza ul Faizah Ha on & Ayman Mansou Khala Alkhazaleh
To ci e his a icle: Hafiz M. Sohail, Hossam Haddad, Mi za Ullah, Nidal Mahmoud Al-Ramahi,
Naza ul Faizah Ha on & Ayman Mansou Khala Alkhazaleh (2024) Op imizing sus ainable high-
quali y economic de elopmen h ough G een Finance wi h obus spa ial es ima ion, Cogen
Economics & Finance, 12:1, 2363466, DOI: 10.1080/23322039.2024.2363466
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DEVELOPMENT ECONOMICS | RESEARCH ARTICLE
Op imizing sus ainable high-quali y economic de elopmen h ough
G een Finance wi h obus spa ial es ima ion
Ha iz M. Sohail
a
, Hossam Haddad
b,c
, Mi za Ullah
d,e
, Nidal Mahmoud Al-Ramahi
b
,
Naza ul Faizah Ha on
a
and Ayman Mansou Khala Alkhazaleh
a
Facul y o Business and Managemen , Uni e si Sul an Zainal Abidin, Te engganu, Malaysia;
b
Accoun ing Depa men and
Business Facul y, Za qa Uni e si y, Za qa, Jo dan;
c
Uni e si y o Business and Technology, Jeddah, Saudi A abia;
d
G adua e
School o Economics and Managemen , U al Fede al Uni e si y, Yeka e inbu g, Russia;
e
School o Managemen Sciences,
Ghulam Ishaq Khan (GIK) Ins i u e o Enginee ing Sciences and Technology, Topi, Swabi, Pakis an;
Facul y o Business,
Middle Eas Uni e si y, Amman, Jo dan
ABSTRACT
G een inance (GF) holds signi ican po en ial in os e ing high-quali y economic de el-
opmen (HED), enhancing socie al a luence consis ency, and alle ia ing po e y by p o-
mo ing sus ainable de elopmen , inno a ion, and esilience. This s udy add esses
en i onmen al challenges and he p omo ion o sus ainable economic g ow h h ough
he pi o al ools o GF. We employ spa ial spillo e , quan ile eg ession, and egional-
wise models o de i e ou key indings. Fi s ly, baseline eg ession analysis e eals a
no ewo hy posi i e associa ion be ween GF and HED, indica ing ha he adop ion and
u iliza ion o g een inancial mechanisms signi ican ly ad ance economic de elopmen
while main aining ecological sus ainabili y. Secondly, using a spa ial econome ic model,
his s udy iden i ies he p esence o a spillo e e ec , showing ha he posi i e impac
o GF on HED ex ends beyond indi idual p o inces and con ibu es o o e all economic
de elopmen on a b oade geog aphical scale. Thi dly, he analysis o egional he e o-
genei y demons a es ha he co ela ion be ween GF and HED a ies ac oss di e en
egions o China. No ably, a signi ican associa ion be ween GF and HED is obse ed in
he wes e n egion, highligh ing he impo ance o conside ing egional dispa i ies in
he implemen a ion and e ec i eness o g een inancial policies. Las ly, h ough quan ile
eg ession analysis, his s udy unco e s non-linea ela ionships be ween GF and HED,
emphasizing ha he impac o g een inancial s a egies on economic de elopmen
a ies ac oss di e en quan iles o he economic de elopmen dis ibu ion. This s udy
p o ides se e al p ac ical policy implica ions o inancial ins i u ions and policymake s.
IMPACT STATEMENT
The s udy examines he ole o G een Finance (GF) in p omo ing High-quali y Economic
De elopmen (HED) ac oss 31 p o inces o China om 2006 o 2020. We used spa ial spill-
o e , quan ile eg ession, and egional models o analyze he ela ionship be ween GF and
HED. The baseline eg ession shows a posi i e ela ionship, wi h spillo e e ec s indica ing
GF’s impac ex ends beyond indi idual p o inces. Regional analysis e eals a signi ican
GF-HED ela ionship, pa icula ly in wes e n China, ep esen ing egional a ia ion in pol-
icy e ec i eness. Quan ile eg ession con i ms a non-linea GF-HED associa ion. This s udy
ad oca es o inancial ans e s o add ess egional dispa i ies. Diagnosing ences hinde -
ing GF e ec i eness and implemen ing ailo ed s a egies o o e come hese challenges
a e c i ical s eps owa d inspi ing HED. This s udy con ibu ed o he exis ing li e a u e by
add essing a p e ious ela ionship, including non-linea , spa ial spillo e e ec s and
egional analysis. I o e s esh insigh s in o en i onmen al p ac ices and aims o a ain
sus ainable de elopmen goals h ough he p omo ion o sus ainable and g een inance.
Abb e ia ions: EC: ene gy consump ion; ED: economic de elopmen ; EDUC: educa-
ion; EG: economic g ow h; FD: inancial decen aliza ion; FIs: inancial ins i u ions;
GDP: g oss domes ic p oduc ; GF: g een inance; HED: high-quali y economic de elop-
men ; PCA: p incipal componen analysis; TFP: o al ac o p oduc i i y; URB:
u baniza ion
ARTICLE HISTORY
Recei ed 3 Ma ch 2024
Re ised 27 May 2024
Accep ed 29 May 2024
KEYWORDS
G een inance; sus ainable
economic de elopmen ;
egional he e ogenei y;
spa ial e ec ; non-linea
ela ionship; China
JEL CLASSIFICATION
Q56; Q01; R11; C14; O53
REVIEWING EDITOR
Goodness Aye, Uni e si y o
Ag icul u e, Maku di Benue
S a e, Benue, Nige ia
SUBJECTS
De elopmen Economics;
Finance; En i onmen al
Economics;
CONTACT Naza ul Faizah Ha on [email p o ec ed] Facul y o Business and Managemen , Uni e si Sul an Zainal Abidin,
Te engganu, 21300, Malaysia
ß2024 The Au ho (s). Published by In o ma UK Limi ed, ading as Taylo & F ancis G oup
This is an Open Access a icle dis ibu ed unde he e ms o he C ea i e Commons A ibu ion License (h p://c ea i ecommons.o g/licenses/by/4.0/), which
pe mi s un es ic ed use, dis ibu ion, and ep oduc ion in any medium, p o ided he o iginal wo k is p ope ly ci ed. The e ms on which his a icle has been
published allow he pos ing o he Accep ed Manusc ip in a eposi o y by he au ho (s) o wi h hei consen .
COGENT ECONOMICS & FINANCE
2024, VOL. 12, NO. 1, 2363466
h ps://doi.o g/10.1080/23322039.2024.2363466
1. In oduc ion
In he nascen e a o China’s e o m and opening-up policy, he coun y emba ked on a monumen al
jou ney o economic ans o ma ion, ma ked by signi ican adjus men s in i s de elopmen al p io i ies
and indus ial landscape. This ans o ma i e phase wi nessed a s a egic shi owa ds p io i izing he
ligh indus y and op imizing he o e all indus ial s uc u e. As a esul o hese e o ms, China expe i-
enced unp eceden ed economic g ow h (EG), p opelling i o he ank o he wo ld’s second-la ges
economy by 2010. Howe e , his ema kable EG aced challenges, pa icula ly conce ning en i onmen al
deg ada ion om pu suing apid EG. Nume ous s udies, such as Li e al. (2016) and Liu e al. (2018),
ha e highligh ed he ad e se en i onmen al impac o China’s EG ajec o y. No ably, he ex ensi e use
o adi ional ene gy, which cons i u es a signi ican po ion o China’s ene gy consump ion, has led o a
su ge in pollu ion emissions, posing h ea s o bo h human heal h and ecological s abili y.
In esponse o hese p essing en i onmen al conce ns, Chinese au ho i ies ha e shi ed om he ad-
i ional pu sui o apid EG o a mo e comp ehensi e app oach e med High-Quali y Economic De elopmen
(HED), also known as sus ainable EG. This shi , as discussed by Gu e al. (2021) e lec s a b oade ecogni ion
o balancing EG wi h en i onmen al sus ainabili y. Con en ional economic amewo ks, such as he Solow
g ow h and endogenous g ow h models, o en emphasize echnological ad ancemen s as he p ima y
d i e o eco- iendly EG, measu ed p ima ily h ough o al ac o p oduc i i y (TFP) g ow h (Gemmell,
1995). Howe e , we no ed, ha he e ec i e esou ce managemen and en i onmen al p ese a ion ha e
b oade socie al bene i s ha hese me ics canno ully cap u e. Add essing his challenge equi es a pa a-
digm shi owa ds a mo e holis ic app oach o economic de elopmen , exempli ied by he G een
P oduc i i y (GP) concep . Figu e 1 illus a es he pi o al ole o GP in os e ing sus ainable economic and
ecological de elopmen , ga ne ing domes ic and in e na ional ecogni ion (Akomea-F impong e al., 2022).
A he in e sec ion o en i onmen al p ese a ion and inancial inno a ion lies he domain o G een Finance
(GF). Cowan (1999) desc ibes GF as he capi al in es men in g een economic de elopmen , and Laba and
Figu e 1. GF con ibu ion owa ds high quali y economic de elopmen . Sou ce: Au ho s ‘calcula ion.
2 H. M. SOHAIL ET AL.
Whi e (2002) desc ibe i as a po en ial ool o he g een economy. Schol ens (2006) highligh s i as a inan-
cial ins i u ion’s social accoun abili y, poin ing o he balance o economic de elopmen wi h he ecological
en i onmen . No ably, GF s ongly emphasizes en i onmen al p o ec ion and esou ce e iciency, dis in-
guishing i om adi ional inance (Gao e al., 2024). The g owing p ominence o GF is e idenced by signi i-
can in es men s in en i onmen al p ojec s, such as clean ene gy ini ia i es (Zhang e al., 2019).
China’s commi men o GF is u he unde sco ed by i s bu geoning g een bond ma ke , which eached
a o al issuance o US$15.7 billion in 2021, posi ioning China as he wo ld’s second-la ges bond ma ke
a e he Uni ed S a es (Reu e s, 2021). Addi ionally, g een loans in China soa ed o US$1.8 illion by he
end o 2020 Huaxia, e lec ing a subs an ial inc ease in inancing o en i onmen ally sus ainable p ojec s.
Fu he mo e, he eme gence o ca bon inance as a signi ican componen o China’s en i onmen al
inance landscape has con ibu ed o es ablishing a obus ca bon ading ma ke (Zhou & Li, 2019). This
end unde sco es China’s g owing ecogni ion o he impo ance o ca bon mi iga ion e o s in achie ing
HED. Figu e 2 depic s China’s GF and HED ends om 2006 o 2020. The GF emblem is due o go e n-
men -led c ea i i ies in g een in as uc u e and clean and g een ene gy consump ion. Oscilla ions in GF
du ing o he epochs may s em om economic changes o policy a ia ions. HED mus mix EG wi h he
eco-en i onmen , whe e GF has a po en ial unc ion. The ising end in HED, especially om 2014 o 2020,
eplica es China’s ocus on echnological p og ession and educa ion, wi h moun ains co esponding o
s a egic in es men s in esea ch and de elopmen . Peaks du ing in e als like 2008-2009, 2011, and 2017
may esul om global inancial disas e s o policy adjus men s a ec ing China’s economy.
Besides, he abo e-men ioned goals a e also ela ed o he goals o he Uni ed Na ions, which a e
ecognized as sus ainable de elopmen goals. In 2015, he UN and membe coun ies ag eed o educe
po e y, sanc ua y he en i onmen , and p omo e EG (Uni ed Na ions, 2015). Consequen ly, GF is c ucial
o p omo ing EG while sa egua ding he p ese a ion o he en i onmen . I encompasses a ious inan-
cial ins umen s and in es men s designed o con ibu e o en i onmen al ini ia i es, dec ease en i on-
men al ha m, and encou age HED epo ed by Chowdhu y e al. (2013) and Lindenbe g.
Gab and Elbannan (2023) emphasize inancial sys em es uc u ing o discou se en i onmen al isks
and encou age sus ainabili y. They highligh he signi icance o g een bonds and loans. G een bonds
inc ease unds o en i onmen al p ojec s like enewable ene gy and clean anspo a ion. G een loans
inance en i onmen ally bene icial p ojec s, o en wi h speci ic ou come condi ions. The banking sec o
boos s GF h ough p oduc s like g een secu i ies, in es men s, insu ance, and in as uc u e bonds (Li
e al., 2023; Pa k & Kim, 2020). Akomea-F impong e al. (2022) highligh mul iple ac o s, such as en i on-
men al and clima e change legisla ion, in e es a es, and he ocus on social inclusion, shape hese
p oduc s. Financial ins i u ions p og essi ely inco po a e en i onmen al ac o s in o hei lending and
in es men choices, acknowledging he inancial haza ds linked o clima e change and en i onmen al
de e io a ion and he ising demand om consume s and in es o s o sus ainable inancial p oduc s.
In ecogni ion o he signi icance o GF and i s unc ion in encou aging economic sus ainabili y, his
s udy aims o con ibu e in he ollowing ways. Al hough some s udies analyze he impac o GF on HED,
hey p oduce mixed esul s (Gao e al., 2022; Li e al., 2022). Fi s ly, his s udy analyzes whe he GF can con-
ibu e o China’s HED bo h wi h and wi hou con ol a iables. To he au ho s’knowledge, none o he
s udies ha e ye e alua ed he spa ial spillo e e ec s wi hin he same ela ionship; hus, he second aim o
his esea ch lies he e. Thi dly, only Li e al. (2022) sc u inize he egional he e ogenei y o iden i y egions
Figu e 2. O e iew o GF and HED in China. Sou ce: Na ional Bu eau S a is ics o China.
COGENT ECONOMICS & FINANCE 3
ha equi e mo e a en ion o imp o emen , which is also he pu pose o his pape . Fou hly, quan ile
eg ession assesses he non-linea ela ionship, which almos all exis ing s udies o e look in hei analysis.
The emainde o he pape p oceeds as ollows: A e he in oduc o y sec ion, sec ion wo empha-
sizes he heo e ical and empi ical s udies ela ed o he associa ion be ween GF and HED. Sec ion h ee
ou lines he da a and me hodology used in his s udy, while sec ion ou elabo a es on he empi ical
esul s. Finally, sec ion i e p o ides he conclusion, inco po a ing policy implica ions, and ou lines
po en ial a enues o u u e esea ch.
2. Li e a u e e iew
HED ela es o he e iciency o inpu -ou pu p oduc ion and he TFP unc ion in p omo ing economic p o-
g ess (Hong e al., 2022). In o he wo ds, i includes economic plans, o ganiza ional agendas, and ope -
a ional dynamics designed o lec u e asso ed socie al equi emen s and show mul idimensional
landscapes. This heo e ical ou line highligh s p inciples o easonable g ow h, ecological s ewa dship, and
indi idual ad ancemen (Jin, 2018). HED comp ise heigh ened and eliable economic g ow h, an e icien
economic agenda, and inclusi e engagemen on a global scale (Feng e al., 2021; Lin & Kim, 2022). Key ea-
u es o his de elopmen al pa e n include e iciency, equi y, en i onmen al ealiza ion, and sus ainabili y,
alongside encou aging collabo a ion ac oss a ious sec o s (Im an & Jijian, 2023; Xiao e al., 2023). The
no ion o GF o igina ed in he Wes e n discou se and la e ga ne ed ex ensi e a en ion om Chinese
esea che s. Cowan (1999) de ines GF as a o m o capi al inancing aimed a p omo ing g een economic
de elopmen , se ing as a b idge be ween he g een economy and he inancial sec o . Simila ly, Laba
and Whi e (2002) a gue ha he p ima y objec i e o GF is o suppo a g een economy, wi h he de elop-
men o g een inancial ools acili a ing sus ainable economic g ow h. Schol ens (2006) elabo a e GF ep-
esen s he social esponsibili y o inancial ins i u ions (FIs), emphasizing he need o ongoing inancial
inno a ion in he de elopmen al p ocess o add ess po en ial ecological and social isks, ul ima ely seeking
o achie e a balance be ween economic de elopmen and he ecological en i onmen .
In 2016, he G20 GF Inclusi e Repo was published, de ining GF as an in es men and inancing
ac i i y capable o gene a ing en i onmen al bene i s and p omo ing sus ainable de elopmen .
Howe e , esea ch on GF in China s a ed ela i ely la e and la gely ocused on he cu en s a e o
a ai s and de elopmen p ospec s o GF. In July 2007, he "Opinions on Implemen ing En i onmen al
P o ec ion Policies and Regula ions o P e en C edi Risks" join ly issued by he People’s Bank o China,
he Banking Regula o y Commission, and he S a e En i onmen al P o ec ion Adminis a ion in oduced
he concep o GF o he i s ime. Ye (2008) belie es ha China’s GF s a egy has achie ed phased suc-
cess, e ec i ely cu bing he uncon olled expansion o en e p ises cha ac e ized by high ene gy con-
sump ion, pollu ion, and esou ce u iliza ion h ough in es men and inancing in e en ions.
Se e al schola s ha e in es iga ed he ole o GF in p omo ing HED using a ious econome ic echniques
and conside ing di e en egions. Fo ins ance, Yang e al. (2021) examined he impac o in ech and GF on
HED om 2007 o 2019 ac oss 30 p o inces in China. Using a wo-s ep gene alized me hod o momen s,
hey ound ha GF as a whole con ibu es posi i ely o h ee key aspec s: he ecological en i onmen , eco-
nomic e iciency, and economic s uc u e. Fu he mo e, hey claimed ha in ech enhances hese posi i e
con ibu ions, pa icula ly in he case o he ecological en i onmen and economic s uc u e. Con i ming he
posi i e impac o GF, Li e al. (2022) conduc ed a s udy on a panel o 30 p o inces in China om 2008 o
2017. Thei esea ch indica ed ha GF signi ican ly p omo es HED, educes en i onmen al pollu ion, and
cu ails ene gy consump ion. In he eas e n egion, GF has a posi i e impac on HED as well, while he wes -
e n and cen al egions do no seem o be impac ed by GF. Using da a om he 30 p o inces o China span-
ning om 2011 o 2021, Han e al. (2023) demons a ed ha GF may imp o e HED. Simila ly, Liu e al. (2021)
employing a wo-way ixed-e ec model, concluded ha GF p omo es HED ac oss he 30 p o inces o China
om 2009 o 2019, wi h echnological inno a ion and indus ial s uc u e playing in e media e oles.
In a s udy by Gao e al. (2022), da a om 30 p o inces in China spanning om 2010 o 2019 we e
used o model he ela ionship be ween GF, en i onmen al pollu ion, and HED. Using au o-spa ial
eg essi e and spa ial e o models, he esea che s concluded ha GF con ibu es o HED in China by
enhancing indus ial s uc u e and he o e all economic de elopmen le el. Ano he s udy conduc ed by
Xu and Dong (2023) co e ing 30 p o inces in China om 2009 o 2019 e alua ed he impac o GF on
4 H. M. SOHAIL ET AL.
HED and i s ansmission way u ilizing he in e media o y model. Using he amily o econome ics
app oaches, indings indica ed al hough egional di e ences we e obse ed.
Ouyang e al. (2023) applied he Hamil on op imiza ion heo y and Di e ence in Di e ence model o
da a om Chinese p o inces be ween 2014 and 2018. Thei indings suppo ed he idea ha GF policies
can help s anda dize he quali y o economic g ow h while educing he g ow h a e. Using non-pa ame -
ic da a om 2011 o 2021 and he di ec ional dis ance unc ion, Jiakui e al. (2023) con i med ha GF,
g een echnology inno a ion, and inancial de elopmen p omo e HED in 30 p o inces o China. A ecen
s udy by Zhao e al. (2024) Sc u inizes he impac o GF and g een echnology inno a ion on g een g ow h
in he 31 p o inces in China o e he pe iod om 2004 o 2018. Findings indica e he posi i e con ibu ion
o bo h GF and GTI on g een g ow h. This e ec was mo e obus in he Middle Eas e n egion han he
Wes e n egion. Simila ly, Qing e al. (2024) u ilized da a om 12 p o inces o China om 2000 o 2019 o
explo e he unc ion o enewable ene gy and GF in a aining ca bon neu ali y. FMOLS app oach e eals
ha China can go smoo hly ega ding ca bon neu ali y, hus enhancing he en i onmen al quali y.
Ano he s udy by A zal e al. (2024) ocus on he 27 Eu opean coun ies om 2013 o 2022. Using he wo-
s ep gene alized me hod o momen indica ed ha GF in g een en i onmen al ini ia i es could pose en i -
onmen al isks due o inc eased liquidi y and c edi isks. Upon conduc ing an in-dep h e iew o he
ela ed li e a u e, we ha e ound ha (Akomea-F impong e al., 2022; Li e al., 2022) ha e assessed he
egional impac o GF on HED bu ha e neglec ed o conside non-linea e ec s. The e o e, ou s udy is
pionee ing in analyzing bo h he non-linea and egional impac o GF on HED in Chinese p o inces.
3. Me hod, model and ma e ials
3.1. Ma e ials
The cu en s udy aims o e alua e he impac o GF on HED alongside o he po en ial con ibu ing ac-
o s ac oss he 31 p o inces o China (see Table 1). The da a u ilized in his s udy anged om 2006 o
2020 and was me iculously sou ced om da abases such as EPS, he China S a is ical Yea book, he
China Insu ance Yea book, and he China Fiscal Yea book. In his con ex , HED, se ing as he dependen
a iable, encompasses he mul i ace ed dimensions o high-quali y economic de elopmen . While many
p e ious s udies ha e elied on he g ow h a e o o al ac o p oduc i i y as an indica o o HED (Gao
e al., 2022; Jiakui e al., 2023), we ha e op ed o a mo e nuanced app oach. Speci ically, we ha e
chosen o assess sub- ac o s, including he p oduc i i y o capi al, labo , and land, o p o ide a mo e
comp ehensi e unde s anding o HED dynamics ( e e o Figu e 3). This delibe a e selec ion enables a
g anula examina ion o he indi idual componen s con ibu ing o o e all economic de elopmen qual-
i y, he eby en iching he analy ical amewo k o his s udy.
3.2. Va iables selec ion
3.2.1. Explana o y and con ol a iables
G een inance (GF) se es as he p ima y explana o y a iable in his s udy, cons uc ed om a ious
sub- ac o s aimed a gauging i s mul i ace ed impac . These sub- ac o s include:
Table 1. Va iables and de ini ion.
Va iables Desc ip ion
HED High-quali y economic de elopmen p oxied by o al ac o
p oduc i i y
GF G een inance is a ype o unding ha suppo s en i onmen al
sus ainabili y
URB U baniza ion consis s o he a io o he URB popula ion o he o al
popula ion
FD Fiscal decen aliza ion is he p ocess o ans e ing iscal and
decision-making powe s om he cen al go e nmen o local o
egional go e nmen s wi hin a coun y
EC Ene gy consump ion o he las yea
TAX Tax is a inancial o economic paymen imposed by he
go e nmen on indi iduals, companies and ins i u ions o inance
public spending and p o ide go e nmen se ices
EDUC Educa ion is he a e age o schooling yea s
COGENT ECONOMICS & FINANCE 5
G een Secu i ies: A-sha e o ma ke alue high ene gy consump ion indus y/The o al alue o A-sha e
(Li e al., 2022).
G een C edi : Assessed by he a io o in e es expenses in ene gy-in ensi e indus ies o he o al
indus ial in e es expendi u e, e lec ing he ex en o which inancial ins i u ions alloca e c edi o
en i onmen ally sus ainable ini ia i es.
G een In es men : Quan i ied by he a io o in es men in en i onmen al pollu ion con ol o GDP,
indica ing he magni ude o in es men s channeled owa ds en i onmen al conse a ion e o s.
G een Insu ance: E alua ed based on ag icul u al insu ance income and he indus y’s o al ou pu
alue, o e ing insigh s in o he insu ance sec o ’s ole in mi iga ing en i onmen al isks.
Ca bon Finance: Measu ed by he a io o CO
2
emissions o GDP, indica ing he economy’s ca bon
oo p in and he deg ee o ca bon mi iga ion measu es in place.
Addi ionally, his s udy inco po a es a ious economic and social indica o s as con ol a iables o
accoun o po en ial con ounding ac o s. These con ol a iables include:
U baniza ion: Re lec ing he le el o u ban de elopmen and i s po en ial in luence on economic
dynamics (Han e al., 2023).
Fiscal Decen aliza ion: Assessed o unde s and he impac o iscal policies and decen aliza ion on
economic de elopmen (Song e al., 2018).
Ene gy Consump ion: Conside ed as a c ucial ac o in luencing economic g ow h and en i onmen al
sus ainabili y (Yang & Wang, 2021).
Tax Le el: Quan i ied o analyze he impac o axa ion policies on economic ac i i ies and de elop-
men (Wang e al., 2023).
Educa ion: Measu ed o accoun o he in luence o human capi al de elopmen on economic g ow h
and de elopmen (Lee & Lee, 2022).
P io o es ima ion and indexing, P incipal Componen Analysis (PCA) was employed o c ea e indices
o bo h GF and HED, ollowing he app oach ou lined by Zeqi aj e al. (2022). This me hod enables he
syn hesis o mul iple a iables in o composi e indices, cap u ing he unde lying dimensions o GF and
HED. Each a iable wi hin hese indices was no malized o acili a e meaning ul compa isons and in e -
p e a ions, enhancing he analy ical obus ness o his s udy.
3.3. Reg ession model speci ica ion
To assess he impac o G een Finance (GF) on high-quali y economic de elopmen (HED) alongside
o he con ibu ing ac o s, we employed a ixed-e ec model o e alua e he eal- ime nexus among he
a iables unde conside a ion. This s udy’s empi ical analysis builds on p e ious esea ch, including he
wo ks o Liu e al. (2023) and Zhao e al. (2023), which se e as benchma ks o ou eg ession analysis
me hod. Be o e p oceeding wi h he p ima y analysis, we conduc ed se e al p e-es ima ion analyses,
such as egional he e ogenei y es s. Based on he esul s o hese p e-es ima ion analyses, we selec ed
ou main es ima ion model. Addi ionally, we applied spa ial spillo e analysis as a obus ness check o
u he con i m ou indings and explo e he ela ionship dynamics mo e deeply. Fo a clea unde s and-
ing, we p esen ed he es ima ion applica ion hie a chy g aphically in Figu e 4.InEq. (1) o his s udy,
we delinea e he econome ic nexus among he dependen and independen a iables, es ablishing a
comp ehensi e amewo k o ou analysis. The ixed-e ec model is speci ied as ollows:
Figu e 3. Va iables amewo k, Sou ce: Au ho s’calcula ion.
6 H. M. SOHAIL ET AL.
HEDi ¼b0þb1GFi þb2URBi þb3FDi þb4ECi þb5TAXi þb6EDUCi þei (1)
By in eg a ing hese me hods and speci ica ions, ou s udy aims o p o ide obus and insigh ul con-
clusions ega ding he ole o GF in p omo ing sus ainable economic de elopmen . In Eq. (1), he HEDi
ep esen s he dependen a iable, and GFi s ands as he co e independen a iable ep esen ing GF.
The pa ame e s o be es ima ed in he cu en s udy a e deno ed by b1 o6:The subsc ip 0i0signi ies
he p o inces, while 0 0 ep esen s he ime pe iod anging om 2006 o 2020. Finally, ei e e s o he
e o e m inhe en in his analysis, cap u ing unobse able ac o s in luencing he dependen a iable.
3.4. P e-Es ima ion and summa y s a is ics
The pa ame e s used in he analysis a e summa ized in Table 2. The mean alue o HED is 1.421, and
he s anda d de ia ion is 2.213, indica ing he ypical de ia ion. GF has he highes de ia ion in he
gi en yea , wi h an a e age alue o 71.184 and a s anda d de ia ion o 1.039. While u baniza ion has
an a e age alue o 5.008, and he s anda d de ia ion is 0.533. Simila ly, inancial decen aliza ion has
a e age and s anda d de ia ion alues o 1.187 and 1.379, espec i ely. Ene gy consump ion and Tax
le el ha e a e age alues o 3.818 and 49.353, espec i ely. Mo eo e , he skewness and ku osis alues
indica e mode a e skewness and no mal dis ibu ion. The Ja que-Be a es con i ms he no mali y o he
da a, wi h p- alues g ea e han 0.05%, allowing he analysis o p oceed o he nex s ep.
4. Empi ical indings
4.1. Summa y o analysis pa ame e s and baseline eg ession esul s
Table 3 p esen s he baseline eg ession esul s o his esea ch s udy. The i s h ee columns include
only he explana o y a iables wi hou any con ol a iables. In he i s column, only he yea is con-
olled, while in he second column, only he p o inces a e con olled. In he hi d column, bo h he
yea and p o inces a e con olled. The eg ession esul s e eal a posi i e coe icien o G een Finance
(GF) a a signi ican le el o 10%, sugges ing i s con ibu ion o high-quali y economic de elopmen
(HED). These esul s align wi h he indings o Zhao e al. (2024), who examined he impac o GF and
g een echnology inno a ion (GTI) on g een g ow h ac oss 31 p o inces in China, con i ming he posi-
i e con ibu ion o bo h GF and GTI o g een g ow h.
Simila ly, Qing e al. (2024) in es iga ed he ole o enewable ene gy and GF in achie ing ca bon
neu ali y. Using he Fully Modi ied O dina y Leas Squa es (FMOLS) app oach, hey concluded ha
China is on a iable pa h owa d ca bon neu ali y, he eby enhancing en i onmen al quali y. Ano he
s udy by A zal e al. (2024), ocusing on 27 Eu opean coun ies, indica ed ha GF in g een en i onmen al
ini ia i es could pose en i onmen al isks due o inc eased liquidi y and c edi isks.
Figu e 4. Empi ical analysis amewo k.
Table 2. Summa y s a is ics.
HED GF URB FD EC Tax EDUC
Mean 1.421 71.184 5.008 1.187 3.818 49.353 8.184
Mean 1.421 71.184 5.008 1.187 3.818 49.353 8.184
Median 1.536 70.805 5.185 0.61 3.831 47.509 7.805
Maximum 5.095 75.193 5.625 3.53 4.11 58.091 5.113
Minimum −5.75 70.297 3.851 −0.665 3.611 44.276 6.297
S d. De . 2.213 1.039 0.533 1.379 0.146 3.832 1.029
Skewness −0.95 2.544 −0.745 0.191 0.517 0.778 2.504
Ku osis 2.767 3.481 2.276 1.45 2.438 2.491 3.411
Ja que-Be a 8.743 87.709 3.544 3.288 1.789 3.462 9.704
COGENT ECONOMICS & FINANCE 7
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Appendix A1. Lis o p o inces
No Na ional Wes e n Cen al Eas e n
1 Anhui Chongqing Anhui Beijing
2 Beijing Gansu Heilongjiang Fujian
3 Chongqing Guangxi Henan Guangdong
4 Fujian Guizhou Hubei Hebei
5 Gansu Inne Mongolia Hunan Jiangsu
6 Guangdong Ningxia Jiangxi Liaoning
7 Guangxi Qinghai Jilin Shandong
8 Guizhou Shaanxi Shanxi Shanghai
9 Hainan Sichuan Tianjin
10 Hebei Tibe Zhejiang
11 Heilongjiang Xinjiang
12 Henan Yunnan
13 Hubei
14 Hunan
15 Inne Mongolia
16 Jiangsu
17 Jiangxi
18 Jilin
19 Liaoning
20 Ningxia
21 Qinghai
22 Shaanxi
23 Shandong
24 Shanghai
25 Shanxi
26 Sichuan
27 Tianjin
28 Tibe
29 Xinjiang
30 Yunnan
31 Zhejiang
14 H. M. SOHAIL ET AL.
