Advancing agricultural ecological transformation through green finance: evidence from urban panel data

Green finance has become a key driver of the ecological transformation of agriculture, yet its effectiveness in developing countries remains insufficiently understood. This study investigates the impact of green finance on agricultural ecological efficiency in China, drawing on panel data from 242 prefecture-level cities from 2011 to 2022. Agricultural ecological efficiency and green finance development are measured using the Malmquist index and entropy method, respectively, and a two-way fixed effects model is employed to identify the effects and underlying mechanisms. The results show that green finance significantly improves agricultural ecological efficiency, with green credit, green insurance and green investment all contributing positively. Mechanism analysis reveals three pathways: enhancing ecological capital accumulation, improving factor allocation and stimulating technological innovation. The impacts are stronger after the 2017 Green Finance Reform and Innovation Pilot Zones policy and are more pronounced in central China. A threshold effect further indicates that the benefits of green finance depend on the stringency of local environmental regulations. Policy implications include strengthening agricultural-oriented green finance frameworks, advancing international cooperation in green capital and technology, expanding pilot programs with region-specific policies and promoting synergistic mechanisms to support sustainable agricultural transformation.