LAUSR

Abstract Green Total Factor Productivity (GTFP) is a critical indicator for measuring the development and transformation of green economy, with profound implication for achieving a win-win situation of conserving energy, reducing emissions, and developing economy. The promotion of GTFP cannot be separated from the financial support and guarantee provided by financial agglomeration. According to the theory of new economic geography and agglomeration, this study uses location entropy and directional SBM-DEA methods to calculate the financial agglomeration level and GTFP of 283 cities at prefecture-level and above in China from 2003 to 2018. A temporal and individual two-way fixed-effect model and a spatial measurement model are constructed to empirically study direct and spillover impacts of financial agglomeration on GTFP. The empirical results show that financial agglomeration facilitates GTFP growth in a given city, but it significantly reduces GTFP in surrounding areas of the city. Divided the cities by their geolocations in eastern, central, and western regions, we find that, in each region, financial agglomeration can significantly promote GTFP of a city but does not have a significant impact on its surrounding areas, indicating a weak spillover effect. Cities with a population of less than 3 million are associated with higher GTFP. Industrial structure, foreign direct investment and human capital play a positive role in GTFP growth, but the role of urban infrastructure construction appears trivial.