Pollution caused by finance and the relative policy analysis in China

In China, where environmental regulations are less strict, finance would cause pollution to rise by promoting the growth of polluting industries. Exploiting a Chinese dataset over the period 2004–2014, 1% increase in the finance measured by credits to GDP, would cause pollution to rise by 4.29%, which is fairly large and cannot be ignored, and the results is robust when finance is measured by deposits to GDP. Thus, it is concluded that policies focused on pollution reduction would be ineffective and that policies on promoting finance would fall short of their intention to stimulate economic growth.