Assessing the impact of green finance development on clean renewable energy use in cooking: A new perspective at the household level

Abstract

While the positive environmental impact of green finance has garnered significant academic attention, most studies have focused on the industry or firm level. The potential effects of green financial development on household adoption of clean renewable energy (CRE) remain underexplored. This paper leverages the quasi-natural experiment of establishing the Green Finance Reform and Innovation Zone (GFRIZ) in China, using difference-in-differences and synthetic difference-in-differences methods to identify the causal impact of green financial development on household CRE use in cooking. The baseline findings indicate that the implementation of the GFRIZ policy increased the likelihood of households adopting CRE in cooking. Moreover, this positive impact can be attributed to environmental awareness, green innovation, and income growth effects. Further analyses revealed that green financial development has a more substantial positive effect on cooking CRE adoption among urban households, households engaged in services, highly educated households, and those in regions with better economic conditions and digital infrastructure. This study enhances the understanding of the environmental benefits of green financial development. Importantly, evidence from the Chinese context may offer valuable insights for other developing countries seeking to develop green finance systems to promote household energy transition.