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Digital finance, technological innovation, and carbon dioxide emissions

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  • Song, Xiaoling
  • Yao, Yumeng
  • Wu, Xueke

Abstract

In the context of China’s carbon peak and carbon neutrality goals (the “dual carbon” goals), balancing economic development, environmental protection, and low carbon is a high priority. Therefore, exploring the impact of digital finance on carbon dioxide (CO2) emissions is crucial. In this paper, we select the panel data of 241 cities in China from 2011 to 2020 and use the double logarithm model after verifying model forms to explore the impact of digital finance on urban CO2 emissions. The results show a significant negative correlation between the level of digital finance and the intensity of CO2 emissions. Heterogeneity analysis results show that the eastern region exhibits the greatest inhibitory effect, while the western region exhibits the lowest. The three sub-dimensions of digital finance can all reduce carbon emissions, but the usage depth dimension has the greatest reduction effect, while the coverage breadth dimension is slightly lower. Through mediating effect tests from two dimensions, we find that digital finance can achieve CO2 emission reduction by promoting scientific and technological innovation. These findings have implications for understanding the carbon reduction effectiveness of digital finance and achieving the dual carbon goals.

Suggested Citation

  • Song, Xiaoling & Yao, Yumeng & Wu, Xueke, 2023. "Digital finance, technological innovation, and carbon dioxide emissions," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 482-494.
    • Handle: RePEc:eee:ecanpo:v:80:y:2023:i:c:p:482-494
    DOI: 10.1016/j.eap.2023.09.005
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    2. Wang, Zongrun & Cao, Xuxin & Ren, Xiaohang & Gozgor, Giray, 2024. "Digital finance and the energy transition: Evidence from Chinese prefecture-level cities," Global Finance Journal, Elsevier, vol. 61(C).
    3. Zhu, Xiaoke & Wu, Hanqi & Deng, Qiyun, 2024. "Quantity or quality: Novel insights into the impact of digital finance on innovation," Finance Research Letters, Elsevier, vol. 65(C).

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