Carbon emissions trading policy, carbon finance, and carbon emissions reduction: evidence from a quasi-natural experiment in China

The purpose of this paper is to explore whether the implementation of carbon emissions trading policy (CETP) promotes carbon finance, proxied by investment and financing facilitating carbon emissions reduction (IFCER), and reduces carbon emissions. Evidence shows that first, CETP is effective in stimulating IFCER and reducing carbon emissions. Second, the effects of CETP persist over time. Third, the effects of CETP taking effect in pilot regions can spill over to non-pilot regions nearby. Fourth, the effect is more pronounced in eastern and wealthy regions. Finally, R&D and industrial upgrading have a mediating effect linking CETP to IFCER and carbon emissions.