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How does digital finance affect green innovation? City-level evidence from China

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  • Zhang, Zhongqingyang
  • Mao, Ruixiang
  • Zhou, Zhongbao
  • Zeng, Zhijian

Abstract

This study explores how digital finance heterogeneously affects green innovation from spatial and nonlinear perspectives. Using panel data from 287 Chinese cities spanning from 2011 to 2021, the spatial Durbin model estimation shows that digital finance can significantly promote green innovation and has a significantly positive spatial spillover effect; among them, the digital finance coverage breadth is the main driver. The stepwise regression method documents that the positive effect can be enhanced by upgrading urban financial development, attracting foreign investment, and saving government expenditures. Heterogeneous analyses show that the positive effect of digital finance on urban green innovation is more pronounced in underdeveloped regions. These findings enrich the research on the utility of digital finance and have policy implications for coordinating green innovation across regions.

Suggested Citation

  • Zhang, Zhongqingyang & Mao, Ruixiang & Zhou, Zhongbao & Zeng, Zhijian, 2023. "How does digital finance affect green innovation? City-level evidence from China," Finance Research Letters, Elsevier, vol. 58(PB).
    • Handle: RePEc:eee:finlet:v:58:y:2023:i:pb:s1544612323007961
    DOI: 10.1016/j.frl.2023.104424
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