ORIGINAL RESEARCH article
Front. Sustain. Cities
Sec. Urban Greening
Volume 7 - 2025 | doi: 10.3389/frsc.2025.1637944
This article is part of the Research TopicDiffusion Dynamics of Sustainable Development Practices in CitiesView all articles
Can Green Financial Policies Promote Green Urbanization? Evidence from China
Provisionally accepted
- Shaanxi Normal University, Xi'an, China
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This study investigates the impact of China's green financial reform pilot zones on urban green development, with the aim of identifying whether financial instruments can effectively promote sustainable urbanization. Using panel data from 286 prefecture-level cities during 2010–2022, a multi-period Difference-in-Differences (DID) approach is applied, supplemented by dynamic effect analysis, robustness checks, and mediation testing. The findings show that green financial policies significantly enhance urban green development, with effects emerging after a time lag and accumulating steadily over the medium to long term. Mechanism analysis reveals that green technology innovation acts as a critical mediator, indicating that financial support for innovation facilitates environmental performance improvements. Moreover, heterogeneity tests suggest stronger policy effects in economically less-developed cities, reflecting higher marginal returns in regions with weaker green foundations. Overall, the study concludes that green finance serves as an effective institutional tool to correct market failures and accelerate sustainable urban transformation. The implications are twofold: policymakers should strengthen financial innovation and green technology support, and adopt region-specific strategies to maximize policy effectiveness while enhancing the quality of urban green development.
Keywords: green finance, Green urbanization, Green technological innovation, Difference-in-differences, China
Received: 30 May 2025; Accepted: 29 Sep 2025.
Copyright: © 2025 MA and XI. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.
* Correspondence: CUNHU XI, 1464034487@qq.com
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