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Nonlinear influence of digital finance on green economic efficiency

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  • Liang, Guibao
  • Xia, Qiao
  • Zhang, Lijie

Abstract

Digital finance (DF) significantly improves green economic efficiency (GEE) by promoting technological innovation and the flow of factors with environmental friendliness. Using panel data from 30 provinces in China from 2011 to 2020, this study uses the super-efficiency Slack-Based Measure(SBM) model with undesirable outputs to measure provincial GEE. This study tests the nonlinear impact of DF on GEE and conducts a heterogeneity analysis. The findings show that (1) a significant, positive U-shaped nonlinear relationship exists between DF and GEE, validated by a robustness test and the instrumental variable model. (2) The U-shaped relationship between DF and GEE is significant in undeveloped regions. Meanwhile, the findings show a linear promoting effect in developed areas. (3) Mechanism research demonstrates that the regional technological innovation level is an effective mechanism of the U-shaped relationship. (4) The moderating effects test finds that environmental regulation can positively moderate the nonlinear relationship between DF and GEE. Therefore, the government should fully leverage the functions of DF to improve GEE.

Suggested Citation

  • Liang, Guibao & Xia, Qiao & Zhang, Lijie, 2025. "Nonlinear influence of digital finance on green economic efficiency," International Review of Financial Analysis, Elsevier, vol. 101(C).
    • Handle: RePEc:eee:finana:v:101:y:2025:i:c:s1057521925001188
    DOI: 10.1016/j.irfa.2025.104031
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