Enhancing green technology innovation efficiency: the role of green finance in China

Financial instruments, particularly green finance, are frequently employed to promote the advancement of green technologies. However, how green finance enhances green technology innovation efficiency (GTIE) remains unclear. This study examines the impact of green finance on GTIE, with a focus on identifying the underlying mechanisms. We find that green finance significantly promotes GTIE, with industrial agglomeration and financial agglomeration serving as key transmission channels. The positive impact of green finance on GTIE is more pronounced in the eastern regions or financially developed provinces. We recommend establishing a virtuous interactive ecosystem that facilitates the dual agglomeration of industry and finance.