Green finance and sustainability in China: Myth or reality?

The current study scrutinizes the asymmetric effect of green finance (GF) on CO₂ emissions in China, along with other control variables including artificial intelligence (AI), information and communication technology (ICT), and institutional quality (IQ). It further examines the moderating role of IQ between GF and CO₂ emissions. Monthly data from 2008 to 2021 were analyzed using Nonlinear Autoregressive Distributed Lag (NARDL) and Multiple Threshold Nonlinear Autoregressive Distributed Lag (MTNARDL) models. The results indicate that GF_POS has a stronger effect on CO 2 emissions compared to GF_NEG (β = -22.1 % vs. -13.5 %), highlighting a significant asymmetry. Additionally, both AI and IQ contribute to reductions in CO 2 emissions, with coefficients of -88.0 % and -30.0 %, respectively, whereas ICT is associated with a slight increase in CO 2 emissions (β = 1.3 %) in the long run. Furthermore, IQ plays a crucial role in strengthening the relationship between GF and CO 2 emissions. These findings highlight the need for policies that promote GF, enhance AI and IQ, and manage ICT to effectively reduce CO 2 emissions.