How can green finance drive wind power growth: evidence from a semiparametric model

Wind power is the fastest-growing renewable energy source and presents huge development prospects. Most existing literature employs linear methods to investigate wind power, often overlooking the nonlinear relationships among economic variables. Unlike previous studies, this article employs a novel semiparametric model to investigate the nonlinear impact and mechanism of green finance on wind power. Empirical results show that green finance exerts a positive U-shaped effect on wind power, suggesting that the driving role of green finance in wind power is gradually becoming prominent over time. Heterogeneity analysis shows that green finance generates an inverted U-shaped impact on wind power in the eastern region, while its impact in the central and western regions presents an N-shaped and a positive U-shaped impact, respectively. From the perspective of production scale, green finance produces a positive U-shaped impact on wind power with medium to low production, and an M-shaped impact on wind power with high output. Mechanism analysis shows that green technology innovation yields a positive U-shaped impact on wind power, while foreign direct investment generates an inverted U-shaped impact on wind power. In addition, the empirical results also show that economic growth, environmental regulations, urbanization, and fossil fuel prices have a push impact on wind power, while power prices and fiscal decentralization have a constraining effect. The policy recommendations derived from the research findings can provide policy references for the formulation of new financial and industrial policies.