Can Green Finance Policy Achieve Collaborative Governance of Air Pollution? Evidence from Prefecture-Level Cities in China

Green finance policy represents a critical market-oriented instrument that channels financial resources toward environmentally sustainable development. This study employs the difference-in-differences (DID) model to empirically analyze the panel data of 276 cities in China spanning 2011 to 2020, using China’s 2017 green finance policy as a quasi-natural experiment. The results demonstrate that after passing a series of robustness tests, green finance policy can effectively alleviate air pollution. In addition, the mechanism test shows that green finance policy can significantly reduce air pollution through the resource allocation effect and green innovation effect. According to heterogeneity analysis, the effects of policy are more noticeable in Western cities, resource-based cities, and cities with higher levels of financial development. These findings provide scientific support for the policy pathways through which green finance facilitates coordinated pollution reduction and high-quality development, offering valuable insights for developing countries in advancing sustainable urban governance.