The Road to Carbon Neutrality: How Does Green Finance Clustering Affect Total Factor Carbon Productivity in China

The significance of green finance (GF) has grown as its ideas and practices have advanced and matured. It now plays a crucial role as a financial catalyst for promoting sustainable development and reducing carbon emissions. However, the imbalance of green finance clustering (GFC) at the geospatial level in China has become more and more prominent, and there is a lack of research on the impact of GFC on total factor carbon productivity (TFCP). Therefore, the objective of this study is to address this research gap by using panel data from 30 provinces in China during the period of 2007–2018 in order to investigate the impact of the GFC on TFCP. The results of the analysis demonstrate a significant enhancement of GFC on TFCP. Secondly, our basic conclusion still holds after a series of robustness tests and addressing endogenous issues. Thirdly, the positive effect of green security clustering on TFCP is most obvious, followed by green investment clustering and green credit clustering. At last, the impact of GFC on TFCP exhibits nonlinear characteristics, influenced by factors such as energy efficiency, green innovation, and energy consumption. Building upon these findings, this paper puts forth policy recommendations aimed at elevating the GFC level to enhance TFCP, thereby facilitating the achievement of carbon neutrality.