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China enacted and implemented a carbon emissions trading pilot policy in 2011, and whether this carbon emissions trading scheme (ETS) can promote the development of green finance is crucial to realizing a win–win situation for both environmental and economic performance. Based on the panel data of 30 provinces in China from 2007 to 2019, this study constructs a multi-period double-difference model (DID) to explore the impact of carbon ETS on the development of green finance and uses the spatial Durbin model (SDM) to test whether there is a spatial spillover effect of the carbon ETS on the development of green finance. The results show that (a) the implementation of carbon ETS significantly promotes the development of green finance, and this conclusion still holds through a series of robustness tests; (b) the promotion effect of the carbon ETS on the development of green finance is more significant in eastern and western provinces, non-resource–based provinces, and provinces with a high level of openness to the outside world; (c) industrial structural upgrading and green innovation play pivotal roles in achieving the desired outcomes of carbon ETS; (d) carbon ETS have spatial spillover effects on the development of green finance, with the indirect effects being more significant than the direct effects. The findings of this study can serve as a valuable reference for expediting the establishment of a unified national carbon market and the development of a robust green financial system. This holds immense significance in effectively implementing the "dual-carbon" strategy. [ABSTRACT FROM AUTHOR]

In the context of addressing climate change and promoting high-quality development, it is necessary to evaluate the impact of carbon emissions trading scheme (ETS) on China's total factor productivity (TFP). Based on a quasi-experimental design, we provide firm-level evidence of TFP improvement from China's pilot ETSs. Using panel data of Chinese listed firms during 2009–2018, the difference-in-differences method is adopted to evaluate the impact of ETS on the firm-level TFP. The results show that the ETS significantly improves the firm-level TFP, increasing it in pilot regions by approximately 14% when compared with non-pilot regions. Further analysis shows that this improvement is not affected by the heterogeneity of firms' ownership, but by industrial heterogeneity. Moreover, this improvement is realized by promoting firms' operating and profitability capacity. We also find that the impact of ETS on firm-level TFP is stable and exhibits no time lag. Our findings not only improve the effectiveness evaluation framework of the Chinese ETS, but also have some implications for how to promote the construction of a national carbon emissions trading market in the context of high-quality development. [Display omitted] • We evaluate the impact of China's ETS on firm-level TFP with the DID method. • ETS significantly improve the firm-level TFP in the pilot regions. • The policy effects are affected by the heterogeneity across industries. • The impact of the ETS on firm-level TFP is stable and exhibits no time lag. • The promotion of firm-level TFP by the ETS does not stem from innovation capacity. [ABSTRACT FROM AUTHOR]