The Spatial Spillover Effects of Green Bonds: A Local and Neighbouring Perspective on Carbon Mitigation

Abstract Green bonds have emerged as a crucial instrument in achieving dual carbon development goals. This study explores the carbon emission reduction effects and mechanisms of green bonds from an innovative local-neighbouring regional perspective, offering vital insights into realising comprehensive low-carbon transformation at the regional level. Utilising panel data from 30 Chinese provinces (including autonomous regions and municipalities directly under the central government) from 2007 to 2022, we investigate the mechanisms through which green bonds influence carbon emission intensity. Our findings demonstrate that green bonds significantly reduce carbon emission intensity, a conclusion that remains robust under Spatial Durbin Model testing. Upon decomposing the total effect, we reveal a nuanced impact: while green bonds effectively reduce local carbon dioxide intensity, disparities in environmental regulations and incentive policies across regions lead to the relocation of polluting enterprises to neighbouring areas. This study argues that while promoting the development of green bonds, it is imperative to strengthen inter-provincial communication and collaboration. Breaking down regional barriers and achieving coordinated development of green financial resources among regions is essential for reducing carbon emission intensity not only locally but also in neighbouring areas. These findings underscore the need for a holistic approach to green finance policy implementation to ensure widespread and equitable carbon reduction across China.