Green financing the future: How smart cities transform China's carbon emissions landscape

The smart city initiative is crucial for achieving China's “dual-carbon” targets. Using panel data from 277 Chinese prefecture-level cities (2009–2022), this study investigates the impact of smart city policies on urban carbon emission intensity, emphasizing the intermediary role of green finance. Employing the entropy method to construct a comprehensive green finance indicator and adopting a Propensity Score Matching–Difference-in-Differences (PSM-DID) model, the empirical analysis reveals that smart city policies significantly reduce carbon emission intensity, with effects robust over time. Mechanism tests further demonstrate that green finance serves as a vital mediator, amplifying policy effects by fostering urban green transformation. The findings yield targeted policy implications to guide China's urban sustainability efforts effectively.