LAUSR

Accelerating industrial upgrading is essential for sustainable development. This paper aims to study how financial development affects industrial transformation and upgrading. First, the financial development index (fin) and the industrial upgrading index (htec, indu) are built using the entropy value approach, which is based on panel data from 30 provinces and cities in China from 2010 to 2020; second, using government intervention as the threshold variable, a fixed effects model and a threshold-effects model are utilized to empirically examine the non-linear link between financial development and industrial sophistication; and finally, the mechanism of financial development on industrial upgrading is examined using the mediating effect model, with science and technology innovation serving as the mediating variable. The study found that financial development has a positive contribution to high-tech industries (htecs). There is a U-shaped non-linear relationship between financial development and industrial advancement (indu). Finance has a stronger effect on promoting industrial upgrading via the intermediary role of science and technology innovation (tec). There is a significant double threshold effect between finance and industrial upgrading. Based on this, this paper puts forward countermeasure suggestions from the perspectives of financial development and scientific and technological innovation. It provides a basis for decision making to realize China’s industrial upgrading and helps in sustainable development in the economy and society.