The findings demonstrate that financial development can improve urban energy net-zero transformation potential, but this depends on the scale of the city, level of economic development, and resource endowment.
Wangwang Ding, School of Mathematics and Statistics, Yancheng Teachers University, Yancheng, China.
Juntao Du, School of Statistics & Applied Mathematics, Anhui University of Finance and Economics, Bengbu, China.
Yigit Kazancoglu, Yasar University, Department of Logistics Management, Business School, Univ Cad 35, TR-35500 Izmir, Turkey.
Sachin Kumar Mangla, Full Professor and Director, Research Center for Digital Circular Economy for Sustainable Development Goals (DCE-SDG), Jindal Global Business School, O.P. Jindal Global University, Haryana, India.
Malin Song, School of Statistics & Applied Mathematics, Anhui University of Finance and Economics, Bengbu 233030, China.
Climate change urgently requires a transition from fossil fuels to clean energy. However, this energy transition demands a dynamic balance between the energy system and the economy and climate, in which adequate financing is a key factor.
This study analyzed data from 285 cities in China from 2004 to 2020 empirically to assess the energy net-zero transformation potential (ENTP) and the relationship between financial development (FD) and ENTP. The findings demonstrate that FD can improve urban ENTP, but this depends on the scale of the city, level of economic development, and resource endowment.
Moreover, a nonlinear relationship exists between FD and ENTP. After FD reaches a certain level, it needs to shift to green finance, which should not be unilaterally emphasized in underdeveloped financial markets.
Finally, FD has a spatial effect on ENTP, and the FD of neighboring regions can improve regional ENTP, which provides the possibility for regional cooperation. The results also provide insights into the financial instruments that can facilitate ENTP implementation.
Published in: Energy Economics
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