The Impact of Local Financial Pressure on Urban Green Innovation Level

Green innovation is an important component of accelerating China's strategic task of building an innovative country, and local finance plays a pillar role in it. This article uses panel data from various cities in China from 2008 to 2019 from the Guotai An database and CNRDS database to explore the impact of local government fiscal pressure on the level of green innovation in cities. The results indicate that local government financial pressure has a restraining effect on the level of urban green innovation, and further horizontal competition between local governments will exacerbate this restraining effect. Meanwhile, the impact of local fiscal pressure on urban green innovation level is heterogeneous. In prefecture level cities and cities with lower innovation preferences, local government fiscal pressure significantly suppresses urban green innovation level, while in sub provincial cities and cities with higher innovation preferences, this impact is not significant. Therefore, from the perspective of the reform of the fiscal transmission system between the central government, local governments, and enterprises, insights are provided to promote the level of urban green innovation.