• Energy Research

Abstract Mounting environmental pressures led China to focus on the effectiveness of the environmental regulation to control pollution. Since the shadow economy, or underground economic activities that are not included in official statistics, accounts for an increasing fraction of China's economy, its impacts on environmental quality should be carefully evaluated. In this study, the main research questions are as follows: 1) What is the extent of the effect of environmental regulation on environmental quality? and 2) What are the factors that influence the impact of environmental regulation on environmental pollution? A theoretical model is developed to explain the relationship among the environmental regulation, shadow economy, and environmental quality in China. An empirical analysis is conducted to test the three propositions of the model, thereby examining the explanatory power of the theoretical model. Concretely, using panel data from 30 provinces for the period of 1998–2012, the generalized method of moments (GMM) method is employed to control for potential endogeneity and introduce dynamic effects. The estimation results indicate that stringent environmental regulation and the level of the shadow economy are both positively related to China's environmental pollution; however, the results also indicate that tighter environmental control would help reduce pollution at a given level of the shadow economy. Moreover, an increase in the proportion of corrupt officials may weaken the environmental regulation, which would consequently lead to the increase in illegal production and total pollutant emissions. Besides, many economic and social factors may also affect the environmental quality. For instance, the development of secondary industry contributes toward an increase in pollutant emissions; however, increased research and development (R&D) spending on eco-friendly industrial operations can help to reduce pollution.

Abstract Mounting environmental pressures led China to focus on the effectiveness of the environmental regulation to control pollution. Since the shadow economy, or underground economic activities that are not included in official statistics, accounts for an increasing fraction of China's economy, its impacts on environmental quality should be carefully evaluated. In this study, the main research questions are as follows: 1) What is the extent of the effect of environmental regulation on environmental quality? and 2) What are the factors that influence the impact of environmental regulation on environmental pollution? A theoretical model is developed to explain the relationship among the environmental regulation, shadow economy, and environmental quality in China. An empirical analysis is conducted to test the three propositions of the model, thereby examining the explanatory power of the theoretical model. Concretely, using panel data from 30 provinces for the period of 1998–2012, the generalized method of moments (GMM) method is employed to control for potential endogeneity and introduce dynamic effects. The estimation results indicate that stringent environmental regulation and the level of the shadow economy are both positively related to China's environmental pollution; however, the results also indicate that tighter environmental control would help reduce pollution at a given level of the shadow economy. Moreover, an increase in the proportion of corrupt officials may weaken the environmental regulation, which would consequently lead to the increase in illegal production and total pollutant emissions. Besides, many economic and social factors may also affect the environmental quality. For instance, the development of secondary industry contributes toward an increase in pollutant emissions; however, increased research and development (R&D) spending on eco-friendly industrial operations can help to reduce pollution.

This article has been retracted. A retraction notice can be found at https://doi.org/10.3233/JIFS-219433.

This article has been retracted. A retraction notice can be found at https://doi.org/10.3233/JIFS-219433.

AbstractAs an effective measure for the local government to promote reduction of corporate carbon emissions and sustainable development of social economy, the implementation of green finance policies in enterprises and financial institutions has encountered severe strikes from the low returns of low carbon production and low interest rates of green credit business. Under the premise of liberalizing carbon emissions trading, a triple‐level network evolutionary game consisting of a local government, banks, and enterprises is constructed to analyze response behavior and strategy selection mechanism to green credit. The impacts of management tools are investigated in terms of setting carbon market price, limiting the financing upper bound of misbehaving enterprises, limiting the emissions quota of enterprises for fraudulent green credit, and rewarding clean project development on the decisions of individuals in the network. Results show the following: First, increasing the trading price of carbon emissions has a catalytic effect on enhancing the activeness of banks and enterprises to follow green finance policies, but the autonomous regulation ability of which is limited. Second, reducing the funding ceiling for emitting emissions illegally ambiguates enterprises' preferences for production strategies and discourages them from undertaking low‐carbon projects. Third, excessive restrictions on the share of emissions may evoke regulatory inaction by the local government, consequently leading to instability in the evolution network. Fourth, granting reward for clean production is instrumental for the network to promote green finance policies, but exorbitant subsidies increase the fiscal burden of the local government with no significant effect on the node selection of environment‐friendly strategies.

AbstractAs an effective measure for the local government to promote reduction of corporate carbon emissions and sustainable development of social economy, the implementation of green finance policies in enterprises and financial institutions has encountered severe strikes from the low returns of low carbon production and low interest rates of green credit business. Under the premise of liberalizing carbon emissions trading, a triple‐level network evolutionary game consisting of a local government, banks, and enterprises is constructed to analyze response behavior and strategy selection mechanism to green credit. The impacts of management tools are investigated in terms of setting carbon market price, limiting the financing upper bound of misbehaving enterprises, limiting the emissions quota of enterprises for fraudulent green credit, and rewarding clean project development on the decisions of individuals in the network. Results show the following: First, increasing the trading price of carbon emissions has a catalytic effect on enhancing the activeness of banks and enterprises to follow green finance policies, but the autonomous regulation ability of which is limited. Second, reducing the funding ceiling for emitting emissions illegally ambiguates enterprises' preferences for production strategies and discourages them from undertaking low‐carbon projects. Third, excessive restrictions on the share of emissions may evoke regulatory inaction by the local government, consequently leading to instability in the evolution network. Fourth, granting reward for clean production is instrumental for the network to promote green finance policies, but exorbitant subsidies increase the fiscal burden of the local government with no significant effect on the node selection of environment‐friendly strategies.