Impact of Financial Development and Its Spatial Spillover Effect on Green Total Factor Productivity: Evidence from 30 Provinces in China

The relationship between financial development and green economic growth has received much attention in recent years. Research on the relationship between financial development and green total factor productivity (GTFP) is of great importance to China and other countries. This study has attempted to reveal the spatial distribution of China's provincial GTFP and impact of financial development on GTFP by using the method of GML index based on SBM-DDF and the spatial Durbin model (SDM) during the period 1996-2015. Innovation is added to the SDM to reflect the influencing mechanism of financial development on GTFP. The empirical results show the following: (1) The mean of China's provincial GTFP showed a U-shaped curve in 1996-2015. (2) China's provincial financial development promotes the growth of GTFP through innovation channel. The reason is that financial development boosts eco-friendly innovation and the introduction of energy saving technology, leading to a decrease in energy consumption and pollutant emissions. (3) Increasing the level of financial development in the surrounding areas will restrain local GTFP. Our results provide new evidence that China's regional financial development has a spatial spillover effect. (4) China's provincial GTFP has a significant spatial positive correlation. Finally, several policy implications can be summarized to China's 30 provinces.