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The development of green finance and social low-carbon transformation is an essential concern for academia and industry. Based on Chinese provincial panel data spanning the period 2005–2019, we introduce the Cobb-Douglas production function and spatial Durbin and dynamic panel threshold models to deeply analyse the impact of green finance on the low-carbon economy. The mechanism test demonstrates that the scale, technique, and structural effects of green finance play a significant role in the low-carbon economy: they correct capital mismatch, promote green technology innovation, and optimise industrial structure. Meanwhile, green finance not only promotes the local low-carbon economy construction process, but also generates spatial spillover effects on neighbouring regions; however, there is regional heterogeneity in the impact of the transmission mechanism. Furthermore, only when capital mismatch is severe, and the low-end industrial structure poor is the positive impact of green finance on the low-carbon economy highlighted based on scale and structural effects; the ability of green finance to contribute to the low-carbon economy through the technique effect has been more stable and significant. This emphasises that green technology innovation is key to supporting low-carbon development in the long run. [ABSTRACT FROM AUTHOR]