Abstract :
Given the complexity between Chinaʹs financial development and carbon emissions, this paper uses some econometric techniques, including cointegration theory, Granger causality test, variance decomposition, etc., to explore the influence of financial development on carbon emissions. Results indicate that, first, Chinaʹs financial development acts as an important driver for carbon emissions increase, which should be taken into account when carbon emissions demand is projected. Second, the influence of financial intermediation scale on carbon emissions outweighs that of other financial development indicators but its efficiencyʹs influence appears by far weaker although it may cause the change of carbon emissions statistically. Third, Chinaʹs stock market scale has relatively larger influence on carbon emissions but the influence of its efficiency is very limited. This to some extent reflects the relatively lower liquidity in Chinaʹs stock markets. Finally, among financial development indicators, Chinaʹs FDI exerts the least influence on the change of carbon emissions, due to its relatively smaller volume compared with GDP; but it is mainly utilized in carbon intensive sectors now, therefore, with the increase of Chinaʹs FDI in the future, many efforts should be made to adapt its utilizing directions and play its positive role in promoting low-carbon development.
