Research on the impact of fiscal and financial synergy on regional carbon emissions: evidence from China

Introduction To promote low-carbon development, green social and economic transformation, and the early realization of “carbon peaking and carbon neutrality“, fiscal and financial synergy is urgently required. Methods Based on the panel data of Chinese provinces from 2006 to 2024, an empirical analysis was conducted on the impact of fiscal and financial synergy on regional carbon emissions. Results The benchmark regression results show that the fiscal and financial synergy has significantly reduced regional carbon emissions in China, and this result remains reliable across multiple endogeneity and robustness tests. Mechanism testing has verified that the key approaches for fiscal and financial synergy to reduce regional carbon emissions are the low-carbonization of energy consumption structure, the greenization of technological innovation, and the modernization of industrial structure. According to heterogeneity analysis, the impact of fiscal and financial synergy on reducing regional carbon emissions is more significant in regions with high attention to green development, large expenditures on scientific and technological innovation, and high levels of financial market development. The results of the spatial spillover effect show that fiscal and financial synergy significantly affects the reduction of carbon emissions in neighboring provinces. In addition, urbanization level has a threshold effect on fiscal and financial synergy's ability to influence carbon emissions. Urbanization can only contribute greatly to the reduction of carbon emissions when it reaches a particular threshold. Discussion This study provides empirical evidence on how to utilize fiscal and financial synergy to advance the development of an ecological civilization, and offers a new framework for investigating viable carbon emission reduction strategies.