The influencing factors and pathways of China’s green finance development towards the Carbon Peaking and Carbon Neutrality —evidence from fuzzy-set qualitative comparative analysis based on 30 provinces of China

In the context of the Carbon Peaking and Carbon Neutrality, the significance of green development, including the development of green finance, has gained increasing attention. It is important to explore the factors and pathways that have impacts on the progress of green finance; however, these are not clearly defined. In this paper, using data from 30 provinces (autonomous regions and municipalities directly under the central government) in China, we investigate the factors that drives the advancement of green finance in China. We utilize the fuzzy set qualitative comparative analysis (fsQCA) technique to scrutinize the effects of economic development, industrial structure, government investment in environmental protection and green innovation capability on the progress of green finance development. The results show that the development of green finance is not solely dependent on the four aforementioned conditions alone. However, according to the group analysis, we find three pathways towards achieving the development of green finance, among which the conditions show relationships of complementarity and substitutability. In order to promote the growth of green finance in China, the local government should leverage the distinctive characteristics of the regions by the method of encouraging green patents, developing clean and green projects and strengthening the regional innovation capacity. Furthermore, the government should play a leading role in enhancing the promotion of green patent applications. Finally, it is essential for each region to conduct a comprehensive analysis of their local resources and devise differentiated strategies for the development of green finance.