World Economic Papers, 2019, Issue 2

Authors: Lv Yue, Lou Chengrong, Lv Yunlong, Wang Yong

Abstract: This paper empirically studies the impact of financial development on China's green space investment in countries along the "the Belt and Road" by using four different financial development indicators based on the "China Enterprise Green Space Investment Database" from 2005 to 2016. The empirical research section analyzes the heterogeneity between domestic enterprises and target countries from multiple perspectives. On the one hand, from the perspective of the heterogeneity of domestic enterprises, based on whether the investment enterprises come from the key provinces identified by the "the Belt and Road" initiative, we found that the financial development of the target countries did not play a positive role in promoting the green space investment of key provinces in the countries along the "the Belt and Road"; From the research on the financial development level of the regions where the investment enterprises are located, the regions with higher financial development level in China have stronger investment promotion effects on the countries along the "the Belt and Road" with higher financial development level, that is, the investment promotion effect of financial development has a superposition effect; The investigation results of distinguishing industry financial dependence indicate that the higher the industry's dependence on external finance, the more significant the promotion effect of financial development on green space investment. On the other hand, based on the heterogeneity of target countries, we found that financial development has a positive impact on green space investment and also varies due to different target countries: firstly, the promotion effect on countries along the overland Silk Road is more prominent; Considering the risk level of the country, it was found that as this indicator increases, the impact of financial development on green space investment shifts from positive to negative; When distinguishing investment motives, it is found that in outward foreign direct investment with more obvious horizontal motives, the positive effect of financial development at the scale of the host country on attracting Chinese enterprises to outward foreign direct investment is also greater; After reviewing China's trade dependence on countries along the the Belt and Road, the conclusion is that the higher the trade dependence, the more obvious the positive effect of financial development on green space investment in countries along the Belt and Road.

Key words: "the Belt and Road" initiative; Financial development; Green space investment; Institutional environment