Science and technology finance policy and inclusive green growth in cities

Inclusive green growth is a core goal of high-quality urban development in the new era, and science and technology finance is widely seen as an institutional tool that can strengthen cities’ capacity for green development. This paper investigates how the science and technology finance policy affects urban inclusive green growth, using panel data for 284 prefecture level and above cities in China over 2006 to 2023. The results show that science and technology finance policy significantly raises inclusive green growth, operating mainly through four channels. Financial support empowers welfare improvements, technological innovation enhances environmental quality and efficiency, structural upgrading promotes economic growth, and market vitality contributes to fairer income distribution. The heterogeneity analysis indicates that the positive effect is stronger in eastern and central regions, in non-resource based cities, in non-provincial capital cities, and in non-old industrial base cities. In addition, the effect of science and technology finance policy varies significantly across different levels of environmental concern, human capital, and financial resources. Further analyses show two additional findings. On the one hand, science and technology finance policy generates significant synergies with mountain-waters project pilot policy and Innovative City pilot policy. On the other hand, science and technology finance policy produces a notable spatial spillover effect on Inclusive green growth: spillovers are negative over short distances, become positive over medium distances, and gradually converge toward zero over long distances. Overall, this paper clarifies how science and technology finance policy promotes inclusive green growth through finance, technology, structure, and market channels, and it offers policy implications for improving the science and technology finance system and advancing coordinated regional green development.