The utilization of a green financial system, particularly through the implementation of green credit, plays a pivotal role in fostering environmentally sustainable, low-carbon economic growth and facilitating the transition toward a more ecologically responsible economy. This paper employs a two-way fixed-effects model, utilizing provincial panel data spanning from 2012 to 2020, to investigate the influence of green credit on regional carbon emissions within different regions of China. The results reveal a significant reduction in carbon emissions as a consequence of the green credit program’s implementation. The analysis of the pathway indicates that green credit is instrumental in mitigating carbon emissions by instigating shifts in the energy mix, with evidence suggesting a partial mediating effect. Furthermore, a heterogeneity analysis discovered that the suppressive impact of green credit on carbon emissions is more pronounced in the eastern and western regions of China, while it is less significant in the central and northeastern areas. The implications of this study provide robust evidence in support of the role of green credit in reducing carbon emissions and can serve as a valuable resource for policymakers aiming to promote the expansion of green credit programs and, in turn, contribute to substantial reductions in carbon emissions.
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