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How does digital inclusion finance alleviate air pollution? Spatial evidence from 1318 counties in China

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Abstract

Combating air pollution is a crucial component in pursing the sustainable city, and digital inclusive finance (DIF) presents a novel approach to achieve this goal. Using 1318 counties panel data from 2014–2020, we examine the relationship between DIF and air pollution across in China with econometric models. We find that DIF significantly reduces air pollution, with the effect diminishing by 1–2% after accounting for spatial correlation. This conclusion remains robust after incorporating instrumental variables into the spatial econometric model to address potential endogeneity issues. Mechanism results show that DIF optimizes population density in each county, while the economic development, industrial structure optimization, and upgrading mechanisms are not significant. Finally, we find that the use of DIF is most effective in counties with lower environmental pollution, higher economic development, and lower population density. Our paper, on one hand, extends the research on the economic benefits of digital inclusive finance from the perspective of spatial association, and on the other hand, provides new evidence from the urban development standpoint on how new technologies can address environmental issues.

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Authors and Affiliations

  1. Economics School, Zhongnan University of Economics and Law, Nanhu Avenue NO.182, Wuhan, 430073, Hubei, People’s Republic of China

    Qian Zhou

  2. School of Finance, Zhongnan University of Economics and Law, Nanhu Avenue NO.182, Wuhan, 430073, Hubei, People’s Republic of China

    Zhipeng Qi

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  1. Qian Zhou
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Correspondence to Zhipeng Qi.

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The information reported in the paper is accurate according to our best knowledge. The paper is entirely original works conducted by us without copying or plagiarism issues. The paper has not been and will not be submitted simultaneously to other journals. The authors of the paper cited reported publications’ work and proper acknowledgment of the work of others has been given. All of the authors of the paper have participated in certain substantive aspects of this study, and they are acknowledged or listed as contributors. The work does not involve any hazards, such as the use of animal or human subjects’ issue. There is no financial or other substantive conflict of interest that might be construed to influence the results or interpretation of our manuscript.

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Zhou, Q., Qi, Z. How does digital inclusion finance alleviate air pollution? Spatial evidence from 1318 counties in China. Environ Dev Sustain (2024). https://doi.org/10.1007/s10668-024-04870-5

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