THE IMPACT OF GREEN FINANCE ON AGRICULTURAL CARBON EMISSIONS: EVIDENCE FROM CITIES IN THE YANGTZE RIVER ECONOMIC BELT

Abstract

Green finance, as a policy instrument integrating environmental and economic benefits, has the potential to reduce agricultural emissions, yet its effectiveness remains insufficiently explored. Using panel data from 108 cities in the Yangtze River Economic Belt over 2011–2023, this study employs twoway fixed-effects, mediation, and panel threshold models to investigate the relationship between green finance and total agricultural carbon emissions (TACE) from the cropping industry, along with possible transmission channels based on observational panel analysis. The results show that: (1) Green finance is significantly negatively associated with TACE, and this association is stronger in downstream regions, major grain-producing areas, and more economically developed cities, indicating heterogeneous policy impacts. (2) This negative association exhibits a threshold pattern: it becomes statistically significant only when the green finance development index exceeds 0.1305 or government intervention exceeds 0.1182, suggesting that green finance may need to reach a certain maturity and work in synergy with government guidance to achieve a qualitative change. (3) Mechanism tests reveal that green finance is correlated with lower emissions through two potential pathways: its positive association with agricultural green technological innovation and its positive association with rural residents' income growth. These two pathways account for 12.07% and 19.08% of the total correlational decomposition, respectively. The policy implications are that developing countries should recognize the existence of a threshold period in green finance development, strengthen institutional frameworks while expanding scale, and facilitate the technology and income transmission channels to ensure that farmers benefit from the green transition.