The collaborative effect of green finance policy on pollution and carbon reduction: A quasi-experimental design

The pilot policy for green finance reform and innovation (PPGFRI) plays a pivotal role in China's green finance framework and the pursuit of pollution and carbon reduction (PCR) goals. This study constructs a multidimensional environmental performance evaluation system, encompassing carbon reduction, air quality, and collaborative effect indicators of the PCR, to assess the impact of PPGFRI. Using a staggered difference-in-differences model, this paper analyzes panel data from 285 Chinese prefecture-level cities spanning 2010 to 2022. Our findings reveal that PPGFRI not only effectively reduces carbon emissions and improves air quality but also significantly enhances the collaborative effect of PCR. Channel analysis indicates that PPGFRI achieves these outcomes through promoting technological R&D, green innovation, and human capital accumulation. Heterogeneity analysis demonstrates that while PPGFRI shows significant unilateral effects in carbon reduction and air quality improvement across all pilot cities, the collaborative PCR effect is more pronounced in eastern regions and developed cities. Furthermore, this study identifies that industrial structure significantly influences policy effectiveness: PPGFRI improves air quality in secondary industry-dominated cities but negatively impacts carbon reduction, whereas it performs well in both dimensions for other cities. Additionally, we uncover that the digital divide and traditional urban infrastructure negatively moderate PPGFRI's collaborative effects, while agricultural insurance plays a positive moderating role. These findings offer valuable insights for refining green finance policies and advancing integrated pollution control and carbon reduction strategies in China and other developing nations.