Carbon Emission and the Fixed Asset Investment of Financial Industry: Evidence from Chinese Provincial Data
International Journal of Environmental Monitoring and Analysis
Volume 6, Issue 5, October 2018, Pages: 131-143
Received: Dec. 9, 2018;
Published: Dec. 11, 2018
Views 238 Downloads 38
Yang Cai, School of Management Science and Engineering, Central University of Finance and Economics, Beijing, P. R. China
Ke Gao, PBC School of Finance, Tsinghua University, Beijing, P. R. China; Development Research Center of Shandong Provincial People’s Government, Jinan, P. R. China
Yongsheng Wang, School of Management Science and Engineering, Central University of Finance and Economics, Beijing, P. R. China
Xiaojing Hao, School of Public Finance and Tax, Central University of Finance and Economics, Beijing, P. R. China
This study examines the effect of the structure of investment in the fixed asset on provincial carbon emission in China, and investigates the channels behind this effect. Using a panel of the provincial data from 2003 to 2016, we identify the significant negative relationship between fixed asset investment of finance and local carbon emission in China. We further apply spatial econometric empirical strategy to explore the spatial effect of fixed asset investment of finance on the provincial carbon emission. Using the adjacent matrix, distance matrix and gravity matrix, it is found that the effect is similar when the spatial correlation influence is considered and to some extent, local investment in the fixed asset of financial industry may give rise to the increase of carbon emission of the surrounding provinces. Moreover, after considering the regional heterogeneity, partial evidence indicates that this negative effect only exists in the sample of eastern part provinces. Furthermore, this study also finds two channels that fixed asset investment of financial industry affects local carbon emission: financial market and the related technological innovations. Through developing financial market and improving technical innovation, the fixed asset investment of financial industry reduces the local carbon emission level. In addition, a relevant case is constructed and we found that financial fixed asset investment promotes technology transfer as well. Using relevant variables, proxies and different estimation models, the results are found robust. This paper contributes to provide a new insight into the influence of structure of fixed asset investment on carbon emission.
Carbon Emission and the Fixed Asset Investment of Financial Industry: Evidence from Chinese Provincial Data, International Journal of Environmental Monitoring and Analysis.
Vol. 6, No. 5,
2018, pp. 131-143.
Zhang, X. P., Cheng, X. M., 2009. Energy consumption, carbon emissions, and economic growth in China. Ecological Economics, 68 (10), 2706-2712.
Zhang, Y. J., 2011. The impact of financial development on carbon emissions: An empirical analysis in China. Energy Policy, 39 (4), 2197-2203.
Wang, S. S., Zhou, D. Q., Zhou, P. et al., 2011. CO2 emissions, energy consumption and economic growth in China: A panel data analysis. Energy Policy, 39 (9), 4870-4875.
Goodall, C., Goodall, C., 2007. How to live a low-carbon life: the individual's guide to stopping climate change. Earthscan, UK.
Spence, C., 2014. Global warming: Personal solutions for a healthy planet. St. Martin's Press, New York.
Dietz, T., Gardner, G. T., Gilligan, J. et al., 2009. Household actions can provide a behavioral wedge to rapidly reduce US carbon emissions. Proceedings of the National Academy of Sciences of the United States of America, 106 (44), 18452-18456.
Jones, C. M., Kammen, D. M., 2011. Quantifying carbon footprint reduction opportunities for U.S. households and communities. Environmental Science & Technology, 45 (9), 4088-4495.
Druckman, A., Chitnis, M., Sorrell, S. et al., 2011. Missing carbon reductions? Exploring rebound and backfire effects in UK households. Energy Policy, 39 (6), 3572-3581.
Price L, Worrell E. International industrial sector energy efficiency policies [J]. Office of Scientific & Technical Information Technical Reports, 2000.
Cai, W., Wang, C., Wang, K. et al., 2007. Scenario analysis on CO2 emissions reduction potential in China's electricity sector. Energy Policy, 35 (12): 6445-6456.
Atkins, M. J., Morrison, A. S., Walmsley, M. R. W., 2010. Carbon emissions pinch analysis (CEPA) for emissions reduction in the New Zealand electricity sector. Applied Energy, 87 (3): 982-987.
Liu, Z., Guan, D., Wei, W., et al., 2015. Reduced carbon emission estimates from fossil fuel combustion and cement production in China. Nature, 524 (7565), 335.
Wang, K., Wang, C., Lu, X., et al., 2007. Scenario analysis on CO2 emissions reduction potential in China's iron and steel industry. Energy Policy, 35 (4), 2320-2335.
Hasanbeigi, A., Morrow, W., Sathaye, J., et al., 2013. A bottom-up model to estimate the energy efficiency improvement and CO2 emission reduction potentials in the Chinese iron and steel industry. Energy, 50, 315-325.
Li, Y., Zhu, L., 2014. Cost of energy saving and CO2 emissions reduction in China’s iron and steel sector. Applied Energy, 130, 603-616.
Holtz-Eakin, D., Selden, T. M., 1995. Stoking the fires? CO2 emissions and economic growth. Journal of public economics, 57 (1), 85-101.
Halicioglu, F., 2009. An econometric study of CO2 emissions, energy consumption, income and foreign trade in Turkey. Energy Policy, 37 (3), 1156-1164.
O'neill, B. C., Dalton, M., Fuchs, R. et al., 2010. Global demographic trends and future carbon emissions. Proceedings of the National Academy of Sciences, 107 (41), 17521-17526.
Wang, S., Fang, C., Guan, X., et al., 2014. Urbanization, energy consumption, and carbon dioxide emissions in China: a panel data analysis of China’s provinces. Applied Energy, 136, 738-749.
Pao, H. T., Tsai, C. M., 2011. Multivariate Granger causality between CO2 emissions, energy consumption, FDI (foreign direct investment) and GDP (gross domestic product): evidence from a panel of BRIC (Brazil, Russian Federation, India, and China) countries. Energy, 36 (1), 685-693.
Lau, L. S., Choong, C. K., Eng, Y. K., 2014. Investigation of the environmental Kuznets curve for carbon emissions in Malaysia: do foreign direct investment and trade matter. Energy Policy, 68, 490-497.
Ozturk, I., Acaravci, A., 2013. The long-run and causal analysis of energy, growth, openness and financial development on carbon emissions in Turkey. Energy Economics, 36, 262-267.
Frankel, J. A., Romer, D. H., 1999. Does trade cause growth. American Economic Review, 89 (3), 379-399.
Dasgupta, S., Laplante, B., Mamingi, N., 2001. Pollution and capital markets in developing countries. Journal of Environmental Economics and management, 42 (3), 310-335.
Jalil, A., Feridun, M., 2011. The impact of growth, energy and financial development on the environment in China: a cointegration analysis. Energy Economics, 33 (2), 284-291.
Shahbaz, M., Hye, Q. M. A., 2013. Tiwari A K, et al. Economic growth, energy consumption, financial development, international trade and CO2 emissions in Indonesia. Renewable and Sustainable Energy Reviews, 25, 109-121.
Shahbaz, M., Solarin, S. A., Mahmood, H., et al., 2013. Does financial development reduce CO2 emissions in Malaysian economy? A time series analysis. Economic Modelling, 35, 145-152.
Boutabba, M. A., 2014. The impact of financial development, income, energy and trade on carbon emissions: Evidence from the Indian economy. Economic Modelling, 40, 33-41.
Dietz, T., Rosa, E. A., 1994, Rethinking the environmental impacts of population, affluence and technology. Hum. Ecol. Rev. 1 (2), 277-300.
Hsu, P. H., Tian, X., Xu, Y., 2014. Financial development and innovation: cross-country evidence. Journal of Financial Economics. 112, 116-135.
Han, F., Xie, R., Lu, Y., Fang, J., Liu, Y., 2018, The effects of urban agglomeration economies on carbon emissions: evidence from Chinese cities. Journal of Cleaner Production. 172, 1096-1110.
Shahbaz, M., Nasreen, S., Ozturk, L., 2016. FDI, growth and CO2 emission relationship: evidence from high, middle and low income countries. B. Energy Economics. 4 (1), 54-69.
Ang, J. B., 2009. CO2 emission, research and technology transfer in China Ecology Economics. 68, 2658-2665.
Zhang, Hua, 2016. Strategic interaction of regional environmental regulation-An explanation on the universality of incomplete enforcement of environmental regulation. China Industry Economics. 7, 74-90 (In Chinese).
Vega, S. H., Elhorst, J. P., 2015. The Slx model. Journal of Regional Science. 55 (3), 339-363.
Tong, J., Wu K. P., 2016. Infrastructure investment structure changes in the process of economic development. Journal of Quantitative Technology and Economics. 12, 61-77 (In Chinese).
Hou, S. X., Zhang, Z. Y., Zhou, J. X., 2014. A study on the growth effect and affecting path of China’s economic structure. Journal of World Economics. 5, 88-111 (In Chinese).
LeSage, J., Pace, R. K. 2009. Introduction to spatial econometrics. CRC Press, Taylor & Francis Group, New York.
National Bureau of Statistics of the People's Republic of China, 2017. China Statistical Yearbook, China Statistical Press, Beijing.
Agénor, P. R., Moreno-Dodson, B., 2006. Public infrastructure and growth: new channels and policy implications. Policy Research Working Paper, No. 4064.
Zhang, G., Song, R., 2013. Transportation impact on manufacturing industry inputs in china. Economic Research Journal. 7, 63-75 (In Chinese).