There is general consensus that "far-reaching thinking" is necessary to address climate change and other environmental concerns. Sustainable green technology is crucial for the efficient and cost-effective reduction of pollutant emissions (Wang et al., 2019). This is especially true in China, which is experiencing a critical period of high-quality development and is being driven by manufacturing innovation, industrial optimization, quality improvement, and green development to strengthen its capacity for industrial green innovation. Luo et al. (2019) a key strategy for accelerating green growth and the transformation of the economy is financial development. Studying the connection between financial development and the invention of green technologies, as well as their mode of operation, is crucial.
2.1. Green Technology Innovation
Lv et al.(2021)Reducing pollution, enhancing technological innovation's effectiveness, and pursuing shared advancements in ecological environmental preservation and social and economic growth are all part of what is referred to as "green technology innovation." Its implementation encompasses two crucial meanings: technological innovation and green development, which both increase input-output efficiency and have financial advantages.
Shen et al. (2021) Environmental regulation has been the primary focus of research on the effects of green technology innovation, but no conclusions have been drawn as of yet. According to some academics, Yi et al. (2019) environmental regulations may prevent the development of new green technologies. For instance, (Kemp and Pontoglio,2011; Shen et al.,2021) assert that environmental regulation will raise the cost of pollution control and therefore have a "crowding out impact" on R&D expenditures, which is unfavorable to the development of green technologies. Environmental legislation, according to some academics, could promote green innovation. According to the Porter Hypothesis, some academics (Chakraborty and Chatterjee, 2017;Yi et al., 2019; Shen et al.,2021)formerly thought that environmental legislation would initially prevent businesses from increasing their output, but over time, it would encourage businesses to act in an inventive manner, which would lead to an increase in productivity. Additionally, the Porter Hypothesis has been supported in other businesses and nations.
Zhong and Peng (2022) summarise various scholars' measures of green innovation indicators, specifically, for example, (Amores-Salvadó et al.,2014; Qi et al.,2020) classify green innovation into two aspects: green process innovation and green product innovation. Some scholars also classify green innovation into two categories of innovation inputs and innovation outputs based on production efficiency (Wang and Shen,2016); the number of R&D inputs and patent applications (Li et al.,2018; Howell,2020) have also been used to measure green innovation. In fact, innovation is a multi-stage dynamic process that includes R&D inputs and patent outputs, but also desired outputs and undesired outputs, etc.
2.2. Financial development and green technology innovation
China's economy and financial system have developed dramatically since the reform and opening up in 1978. The idea of green development is also reflected in the financial development process. It has two forms: from an economic perspective, Lee and Lee (2022) the capital support function of financial development can efficiently speed up the rationalization of economic structure adjustment, enhance the investment effect and quality of supply-side reform, and so stabilize economic growth. Lee and Lee (2022) Going green can help businesses engage in green innovation and environmental protection initiatives, advance corporate social responsibility and environmental performance, and achieve sustainable economic and environmental development from an environmental standpoint (Xu and Li, 2020; Hu et al., 2021).
The study of the connection between financial development and green technology innovation has drawn increasing attention as the concept of the green economy has been gradually and thoroughly developed (Lv et al., 2021). The conclusion on the influence of financial development on the innovation of green technology, however, is not universally agreed upon. Some people believe that financial progress has an effect on the advancement of green technology. Specifically, Jalil and Feridun (2011) capital has moved from low-efficiency to high-efficiency businesses due to the financial system and economic reforms, which has eliminated outmoded production and decreased waste and pollution. Financial intermediation accelerates technical innovation and fosters advancement in technology (King and Levine, 1993). Similar to this, Jalil and Feridun (2011) contend that underdeveloped nations can acquire cutting-edge environmental protection technologies through financial development (Frankel and Rose, 2002). These scientific developments can drastically lower pollution emissions. On the other side, other academics think that financial growth inhibits the development of green technology. Particularly, Jalil and Feridun (2011) financial development enables some heavy sectors to boost spending, put in new infrastructure, and raise production capacity, all of which increase the release of pollutants into the environment (Sadorsky, 2010; Shahbaz et al., 2013). Lv et al.(2021) Financial development can also make it easier for businesses to secure financing, lower transaction costs by gathering information and spreading out risks, encourage the flow of capital to technology innovation projects, and increase the effectiveness of business technological innovation (Chiu and Lee, 2020).
The aforementioned literature serves as a valuable source of information and inspiration for our study, but it also has the following flaws: First, some literatures measure the innovation of green technologies using various methodologies, and the results may deviate in some ways. As a result, Section 3 of this research uses a measurement-focused approach to examine green technology innovation. The relationship between financial development and technical innovation has been extensively studied, but studies of green technological innovation are rare. Third, there is a dearth of knowledge regarding the relationship and impact path between financial development and the development of green technologies. Additionally, choosing indicators for study on financial development is not too difficult. Therefore, the measurement of financial development can be characterized from several dimensions in order to accurately reflect the level of financial growth (Chiu and Lee, 2019; Lv et al., 2021). This study measures the degree of financial development using three criteria: financial structure, financial deepening, and financial efficiency.