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Does the development of digital finance curb carbon emissions? Evidence from county data in China

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Abstract

Reducing carbon emissions is the key to fulfilling the “double carbon commitment” and promoting the green transformation of the economy. The financial sector is the forerunner of change in economic development. The rapid development of digital finance has disrupted the traditional financial operation mode and has had a significant impact on economic development and environmental quality. This paper explores the impact of digital finance development on carbon emissions using carbon emission data from 2011 to 2017 in China’s counties and combining it with the Digital Inclusive Finance Index of Peking University. The findings are as follows: (1) The development of digital finance can curb carbon emissions, and this causal relationship still holds through a series of robustness tests. The greater the carbon emissions, the better the carbon suppression effect of the development of digital finance. (2) When regions face strict financial regulation and environmental constraints, the development of digital finance can be more effective in reducing carbon emissions. The existence of a digital divide in general can weaken the disincentive effect of the development of digital finance on carbon emissions. (3) The development of digital finance can promote the development of green finance, enhance the level of green technological innovation, improve green total factor productivity, and transform energy structures, thus curbing carbon emissions. This paper not only enriches the literature on the development of digital finance and the environment but also provides a reference for government departments to improve the development strategy of digital finance and achieve “carbon peaking and carbon neutrality.”

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Authors and Affiliations

  1. School of Business, University of Jinan, Jinan, 250022, Shandong, China

    Haomin Chu, Hongjuan Yu & Yu Chong

  2. School of Business, Shanghai University of Finance and Economics, Shanghai, 200433, China

    Liping Li

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  1. Haomin Chu
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  2. Hongjuan Yu
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  3. Yu Chong
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  4. Liping Li
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Contributions

Haomin Chu, Hongjuan Yu, and Liping Li carried out the model analyses and contributed to the writing of the paper. Yu Chong contributed to the collection of data and reviewed the literature. All authors have read and approved the final version of the manuscript.

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Correspondence to Liping Li.

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Highlights

• This paper analyzes whether digital finance development can curb carbon emissions.

• The development of digital finance can curb carbon emissions. The results of robustness tests support this finding.

• The greater the carbon emissions, the better the carbon suppression effect of the development of digital finance.

• Digital finance development has a stronger emission reduction effect on strict financial regulation and environmental constraints than on low financial regulation and environmental constraints.

• Green finance, green technological innovation, green total factor productivity, and energy structure are the main factors affecting carbon emissions.

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Chu, H., Yu, H., Chong, Y. et al. Does the development of digital finance curb carbon emissions? Evidence from county data in China. Environ Sci Pollut Res 30, 49237–49254 (2023). https://doi.org/10.1007/s11356-023-25659-5

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