Green credit and green technology innovation: Impact mechanism and nonlinear effect test

Abstract

Green technology is becoming an important emerging field for achieving carbon neutrality. Green credit is a new financial tool of supporting low-carbon development. The motivation of this article is to investigate the impact and mechanism of green credit on green technology innovation. Most existing literature uses linear models to investigate green technologies, masking the possible nonlinear relationships between economic variables. Unlike existing literature, this article uses a data-driven nonparametric additive model to investigate the nonlinear impact of green credit on green technology innovation. The empirical findings show that green credit exerts a U-shaped impact on green technology innovation, signifying that the effect of green credit has shifted from less prominent in the early stages to prominent in the later stages. Heterogeneity analysis displays that the impact of green credit on green technology innovation in the provinces with different financial all are nonlinear. Further mechanism analysis demonstrates that both the banking market structure and corporate R&D investment generate a U-shaped impact on green technology innovation. Finally, this paper provides policy reference for promoting green credit development and achieving carbon neutrality.