Do Green Credit Bonds Enhance Green Total Factor Productivity? Evidence from China

Green finance is increasingly expected to support decarbonization while enhancing productivity, yet evidence on whether green credit bonds raise green total factor productivity (GTFP) remains limited. Using panel data for 29 provincial-level regions in China from 2016 to 2023, we compute GTFP using a slacks-based measure Malmquist–Luenberger (SBM–ML) index and estimate two-way fixed-effects models. To address endogeneity, we employ a Bartik shift–share instrumental-variable strategy. We found that green credit bonds significantly increase GTFP, with gains driven mainly by technological change (TC) rather than efficiency change (EC). The effect is stronger in eastern and western regions, in provinces that are not low-carbon pilot areas, and in regions with stronger low-carbon governance orientation. Public environmental attention directly improves GTFP but dampens the marginal effect of green credit bonds. Mechanism analyses further indicate that the low-carbon transition of the energy mix (LCEM) is an important transmission channel. Overall, these findings suggest that scaling up and better targeting green credit bonds, alongside complementary governance and public scrutiny, can accelerate China’s transition toward higher green productivity. This provides sustainability-relevant evidence that market-based green finance can support decarbonization while sustaining productivity growth, contributing to long-term sustainable development.