How to control air pollution with economic means? Exploration of China's green finance policy.

Air pollution is not only an environmental problem, but also an economic problem. Faced with the deteriorating air pollution, the role of financial institutions is increasingly valued. Because different air pollutants come from diverse sources, the same economic means have different impacts. To investigate this question, this paper adopts difference-in-differences to test China's green finance policy issued in 2017. The results indicate that green finance policy is capable of controlling overall situation of air pollution. As for the specific six pollutants, it shows superiority in reducing SO 2 , NO 2 and PM 2.5 , but inferiority in reducing CO, O 3 and PM 10. Besides, the control effects of green finance policy are through local companies' economic behaviors. Compared with the economically developed regions, the emission reduction effects of green finance policy in the economically underdeveloped regions are better. These findings offer references for how to control air pollution with economic means from the perspective of micro practice. • Pilot provinces have taken the lead in exploring green finance. • Air pollution is not only an environmental problem, but also an economic problem. • The green finance policy can reduce the air pollution. • The effect of green finance is better in the underdeveloped regions. [ABSTRACT FROM AUTHOR]