Role of credit subsidies and financial intermediation in China and Japan: implications for green economic growth

The worldwide Paris accord climate objectives for the residential construction industry were mainly implemented into national law as CO2 emission reduction standards for specific years (80% reduction by 2035). The main goal of this study is to test the association between credit subsidies and climate change mitigation. Chinese and Japanese data from 2010 to 2019, unit root test, and error correction modelling technique are employed. The results are then analysed using a regression formula. The findings show significant results: (i) credit subsidies are important in climate change mitigation in China and Japan, (ii) they significantly contribute to mitigating fiscal imbalances, and (iii) it boosts trade across countries. Moreover, providing credit subsidies to local households is a beneficial practice that can mitigate climate change by 36% in China and 29% in Japan. The modern world, including China and Japan, must improve its financial intermediation systems to provide credits for household for effective climate change mitigation.