How Do Financial Development and Industrial Structure Affect Green Total Factor Energy Efficiency: Evidence from China

Abstract

Improving energy efficiency is vital for addressing climate change and reducing carbon emissions in emerging economies. Financial development (FD) is crucial for economic growth, and its environmental impact and the adjustment of the industrial structure (IND) is a crucial lever in China’s economic transition period. This study explored the relationship between FD, IND, and China’s green total factor productivity (GTFEE) from 2000 to 2020 using the super-efficiency SBM-undesirable model, which estimates China’s GTFEE. The ARDL results suggest that FD and IND enhance GTFEE in the long term, with FD promoting GTFEE by facilitating industrial structure adjustments. The Dumitrescu–Hurlin panel causality tests supported this finding. The QRPD panel quantile regression and heterogeneity analysis revealed significant heterogeneity in the effects. With increasing GTFEE, FD exerts a restraining effect, gradually weakening and transitioning into a promoting effect, while the IND consistently plays a promoting role.