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Assessing the impact of digital financial inclusion on PM2.5 concentration: evidence from China

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Abstract

Digital finance as a new technology-driven business model shortens the distance between borrowers and lenders. Economic research finds that digital finance promotes economic efficiency by reducing transaction costs, information asymmetry, and inequality. Digital finance is an energy-intensive industry; therefore, increased efficiency in the industry should yield environmental benefits. We examine the externality of digital finance on air pollution. By analyzing data on digital financial inclusion and fine particulate matter concentration in China, we demonstrate using a dynamic panel data model that the development of digital finance damages the environment. However, after incorporating a threshold effect into a kink model, we determine that digital finance reduces pollution when its development exceeds a certain level. The results suggest that a high level of digital finance development not only increases economic growth but also improves air quality; this result provides novel insight into the relationship between economic growth and the environment.

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Data availability

Most of the basic data are publicly available mainly from the National Bureau of Statistics of China, the official website, http://www.stats.gov.cn/, and the Wind and IFind financial databases. Other data are calculated by authors, and the calculation method is shown in the text of this paper.

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Authors and Affiliations

  1. College of Economics, Shenzhen University, 3688 Nanhai Avenue, Nanshan District, Shenzhen, 518060, Guangdong, China

    Lu Yang

  2. School of Math Science, University of Southampton, Southampton, SO17 1BJ, UK

    Lulu Wang

  3. School of Business, Central South University, Changsha, 410083, China

    Xiaohang Ren

Authors
  1. Lu Yang
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  2. Lulu Wang
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  3. Xiaohang Ren
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Contributions

Lu Yang: Resources; Validation; Writing, original draft; Writing, review and editing.

LuLu Wang: Investigation; Writing, original draft.

Xiaohang Ren: Conceptualization; Methodology; Software; Writing, original draft; Formal analysis.

Corresponding author

Correspondence to Xiaohang Ren.

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Competing interests

The authors declare no competing interests.

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Responsible Editor: Nicholas Apergis

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Highlights

The PM2.5 concentration in cities of China was analyzed.

An asymmetric impact exists for digital financial inclusion and PM2.5.

Dynamic panel threshold model is used to investigate the nonlinear relationship.

Digital financial inclusion shows different impacts on PM2.5 at high- and low-level phases.

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Cite this article

Yang, L., Wang, L. & Ren, X. Assessing the impact of digital financial inclusion on PM2.5 concentration: evidence from China. Environ Sci Pollut Res 29, 22547–22554 (2022). https://doi.org/10.1007/s11356-021-17030-3

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  • DOI: https://doi.org/10.1007/s11356-021-17030-3

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