Abstract: The theoretical mechanism of green finance affecting green total factor productivity (TFP) is analyzed, and then based on the panel data of 30 provinces and cities in China from 2005 to 2017, green TFP is estimated by using SBM(Slack-based Measure) directional distance function and Global Malmquist-Luenberger (GML) index, and a green financial index system is constructed and the development level of green finance is estimated by using entropy method. Then, the static IV-GMM regression model and mediation effect model are used to systematically investigate the impact of green finance on green TFP and its mechanism. The results show that Chinas green finance is still at a relatively low level of development while green TFP shows the trend of growth, and both of them show great provincial and regional differences. The regression results show that the development of green finance can significantly promote the growth of green TFP in both coastal and inland areas and the whole country, but it plays a greater role in promoting coastal areas. The mediation effect test results show that for the whole country, the mediation effect of industrial structure optimization, energy saving and emission reduction and green technology innovation is significant, while only the mediation effect of energy saving and emission reduction and green technology innovation is significant in coastal and inland areas.

Key words:  green finance, green total factor productivity, static IV-GMM, mediation effect test