Urbanization and green finance in Chinese cities: uncovering novel dynamics and policy implications for sustainable development

Abstract

The study investigates the relationship between urbanization factors, green finance investment patterns, and environmental effects. It also establishes how government policy can connect them. This research employed pragmatic parameters to conduct quantitative statistical analyses using descriptive statistics, correlation, and Ordinary Least Squares (OLS) regression on data from 100 Chinese urban areas from February 2024 through January 2025. Our research design investigates the effects of urbanization on green finance investment and its environmental impacts using policy environment support as the intermediating factor. The results demonstrate that higher urbanization rates promote the growth of green finance programs and create a mutually beneficial process for developing effective policies. The current study demonstrates the complex interplay between urbanization and green finance in cities in China and the role of local government policy as a mediating factor. It provides implications for practitioners in their pursuit of sustainable development. The study presents actionable information that policy leaders, financial institutions, and urban planners require to develop holistic development methods promoting sustainability during rapid urbanization.