Understanding the Dual Effects of Green Finance on Carbon Emission Reduction and Economic Growth

Abstract

In recent years, as countries have attempted to achieve economic development and environmental protection simultaneously, green finance has drawn the attention of many governments and institutions around the world and is now a popular subject of discussion. Review of previous studies on the relationship between green finance, carbon emission reduction and economic growth. First, it will review the interpretations of the concept of green finance in the literature and compare the methods of measurement. Next, the three primary channels for the impact of green finance on environmental performance and economic development are introduced. Most of the current studies have found that green finance can reduce carbon emissions by providing funds for the construction of eco-friendly facilities and fostering the development of green technology. At the same time, it will also promote the long-term development of the economy by driving industrial upgrading and creating new sources of revenue. The results of the studies mentioned in the literature are not the same either; this is mainly because they used different indices, data sources and empirical approaches. Based on the above studies, some deficiencies in the present research have been identified and future directions for study proposed.