A study on the spatiotemporal differences and influencing factors of carbon finance development in Western China

Abstract Against the backdrop of global climate change and China’s “Dual Carbon” goals, carbon finance has emerged as an important market-based instrument for achieving coordinated carbon emission reduction and sustainable economic development. As a region characterized by abundant energy resources and critical ecological functions, Western China faces both substantial decarbonization pressures and significant opportunities for carbon sink development and green transformation. To evaluate the development of carbon finance in Western China, this study constructs a comprehensive evaluation index system based on the Pressure–State–Response (PSR) framework and applies the entropy weight method to panel data from 79 prefecture-level cities during 2014–2024. The spatiotemporal evolution of carbon finance is further examined using spatial analysis, while a Geographical Detector model is employed to identify its driving factors. The results indicate that the overall level of carbon finance in Western China increased steadily over the study period, although substantial disparities persist across cities and across the three PSR dimensions. Carbon finance development exhibits significant positive spatial autocorrelation and spatial spillover effects, while regional development remains uneven despite a gradual weakening of spatial polarization. Green innovation, green consumption, and digital development are identified as the primary drivers of carbon finance, whereas environmental regulation mainly exerts its influence through interactions with other factors rather than independently. Based on these findings, this study suggests strengthening interregional collaboration, fostering green innovation, and leveraging digital technologies to promote the coordinated and high-quality development of carbon finance in Western China.