IDEAS home Printed from https://ideas.repec.org/a/plo/pone00/0257498.html
   My bibliography  Save this article

Does the digital finance revolution validate the Environmental Kuznets Curve? Empirical findings from China

Author

Listed:
  • Kaiyang Zhong

Abstract

In recent years, digital finance has become a crucial part of the financial system and reshaped the mode of green finance in China. Digital finance has brought certain impact on economic growth, industrial structure, and resident income, which may affect pollution. The nexus of digital finance and environment in China is thus worth exploring. By revising the traditional Environmental Kuznets Curve model with income inequality variable, this paper decomposes the environmental effects of economic activities into income growth effect, industrial structure effect and income inequality effect, and use panel data of China’s provinces to conduct an empirical analysis. The results reveal the following: (1) the Environmental Kuznets Curve is still valid in sample, and digital finance can reduce air and water pollution (as measured through SO2 and COD emission) directly; (2) in the influence mechanism, digital finance can alleviate income inequality and promote green industrial structure, thus reducing pollution indirectly, but the scale effect of income growth outweighs the technological effect, which increases pollution indirectly; and (3) digital finance has a threshold effect on improving the environment, then an acceleration effect appears after a certain threshold value. From the regional perspective, digital finance development in eastern regions is generally ahead of central and western regions, and the effects of environmental improvement in the eastern regions are greater. According to the study, this paper suggest that digital finance can be an effective way to promote social sustainability by alleviating income inequality and environmental sustainability by reducing pollution.

Suggested Citation

  • Kaiyang Zhong, 2022. "Does the digital finance revolution validate the Environmental Kuznets Curve? Empirical findings from China," PLOS ONE, Public Library of Science, vol. 17(1), pages 1-19, January.
    • Handle: RePEc:plo:pone00:0257498
    DOI: 10.1371/journal.pone.0257498
    as

    Download full text from publisher

    File URL: https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0257498
    Download Restriction: no
    File URL: https://journals.plos.org/plosone/article/file?id=10.1371/journal.pone.0257498&type=printable
    Download Restriction: no
    File URL: https://libkey.io/10.1371/journal.pone.0257498?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Peterson K. Ozili, 2018. "Impact of digital finance on financial inclusion and stability," Borsa Istanbul Review, Research and Business Development Department, Borsa Istanbul, vol. 18(4), pages 329-340, December.
    2. Dong, Xiao-Ying & Hao, Yu, 2018. "Would income inequality affect electricity consumption? Evidence from China," Energy, Elsevier, vol. 142(C), pages 215-227.
    3. Grossman, G.M & Krueger, A.B., 1991. "Environmental Impacts of a North American Free Trade Agreement," Papers 158, Princeton, Woodrow Wilson School - Public and International Affairs.
    4. Yang, Haisheng & He, Jie & Chen, Shaoling, 2015. "The fragility of the Environmental Kuznets Curve: Revisiting the hypothesis with Chinese data via an “Extreme Bound Analysis”," Ecological Economics, Elsevier, vol. 109(C), pages 41-58.
    5. Golley, Jane & Meng, Xin, 2012. "Income inequality and carbon dioxide emissions: The case of Chinese urban households," Energy Economics, Elsevier, vol. 34(6), pages 1864-1872.
    6. Joon Hyoung Lim & Eungkyoon Lee, 2012. "Information technologies, community characteristics and environmental outcomes: evidence from South Korea," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 55(3), pages 271-296, May.
    7. Lee, Sanghoon & Oh, Dae-Won, 2015. "Economic growth and the environment in China: Empirical evidence using prefecture level data," China Economic Review, Elsevier, vol. 36(C), pages 73-85.
    8. Manoel Bittencourt, 2010. "Financial development and inequality: Brazil 1985–1994," Economic Change and Restructuring, Springer, vol. 43(2), pages 113-130, May.
    9. Boyce, James K., 1994. "Inequality as a cause of environmental degradation," Ecological Economics, Elsevier, vol. 11(3), pages 169-178, December.
    10. Ozili, Peterson Kitakogelu, 2018. "Impact of Digital Finance on Financial Inclusion and Stability," MPRA Paper 84771, University Library of Munich, Germany.
    11. Li, Jie & Wu, Yu & Xiao, Jing Jian, 2020. "The impact of digital finance on household consumption: Evidence from China," Economic Modelling, Elsevier, vol. 86(C), pages 317-326.
    12. James Boyce, 1994. "Inequality as a Cause of Environmental Degradation," Published Studies ps1, Political Economy Research Institute, University of Massachusetts at Amherst.
    13. Angel Hsu & Zhi Yi Yeo & Amy Weinfurter, 2020. "Emerging digital environmental governance in China: the case of black and smelly waters in China," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 63(1), pages 14-31, January.
    14. Jingling Chen & Tao Eric Hu & Rob van Tulder, 2019. "Is the Environmental Kuznets Curve Still Valid: A Perspective of Wicked Problems," Sustainability, MDPI, vol. 11(17), pages 1-17, August.
    15. Pata, Ugur Korkut, 2018. "The influence of coal and noncarbohydrate energy consumption on CO2 emissions: Revisiting the environmental Kuznets curve hypothesis for Turkey," Energy, Elsevier, vol. 160(C), pages 1115-1123.
    16. Dinda, Soumyananda, 2004. "Environmental Kuznets Curve Hypothesis: A Survey," Ecological Economics, Elsevier, vol. 49(4), pages 431-455, August.
    17. Lange, Steffen & Pohl, Johanna & Santarius, Tilman, 2020. "Digitalization and energy consumption. Does ICT reduce energy demand?," Ecological Economics, Elsevier, vol. 176(C).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zhe Zhang, 2022. "Research on the Impact of Digital Finance on China's Urban-Rural Income Gap," Review of Economic Assessment, Anser Press, vol. 1(1), pages 63-75, December.
    2. Tang, Yunfeng & Zhang, Xuan & Lu, Shibao & Taghizadeh-Hesary, Farhad, 2023. "Digital finance and air pollution in China: Evolution characteristics, impact mechanism and regional differences," Resources Policy, Elsevier, vol. 86(PA).
    3. 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.
    4. Lee, Chien-Chiang & He, Zhi-Wen & Yuan, Zihao, 2023. "A pathway to sustainable development: Digitization and green productivity," Energy Economics, Elsevier, vol. 124(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Inmaculada Martinez-Zarzoso & Leon Pilgrim, 2023. "Revisiting the link between income inequality and emissions," Working Papers 2023.04, International Network for Economic Research - INFER.
    2. Chao Zhang & Ruifa Hu, 2020. "Does Fertilizer Use Intensity Respond to the Urban-Rural Income Gap? Evidence from a Dynamic Panel-Data Analysis in China," Sustainability, MDPI, vol. 12(1), pages 1-15, January.
    3. Cantos, José Mª & Balsalobre Lorente, Daniel, 2011. "Las energías renovables en la Curva de Kuznets Ambiental: Una aplicación para España/Renewable Energy in the Environmental Kuznets Curve: An Application to Spain," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 29, pages 667(32.)-66, Agosto.
    4. Heping Ge & Lianzhen Tang & Xiaojun Zhou & Decai Tang & Valentina Boamah, 2022. "Research on the Effect of Rural Inclusive Financial Ecological Environment on Rural Household Income in China," IJERPH, MDPI, vol. 19(4), pages 1-16, February.
    5. Zhang, Chuanguo & Zhao, Wei, 2014. "Panel estimation for income inequality and CO2 emissions: A regional analysis in China," Applied Energy, Elsevier, vol. 136(C), pages 382-392.
    6. Haider Mahmood & Maham Furqan & Muhammad Shahid Hassan & Soumen Rej, 2023. "The Environmental Kuznets Curve (EKC) Hypothesis in China: A Review," Sustainability, MDPI, vol. 15(7), pages 1-32, April.
    7. Lin Guo, 2017. "Income Inequality, Household Consumption And Co2 Emissions In China," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 62(02), pages 531-553, June.
    8. Balaguer, Jacint & Cantavella, Manuel, 2018. "The role of education in the Environmental Kuznets Curve. Evidence from Australian data," Energy Economics, Elsevier, vol. 70(C), pages 289-296.
    9. Zhang, C. & Sun, Y. & Hu, R., 2018. "Does urban-rural income inequality increase agricultural fertilizer or pesticide use? A provincial panel data analysis in China," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277033, International Association of Agricultural Economists.
    10. Alexandra-Anca Purcel, 2020. "New insights into the environmental Kuznets curve hypothesis in developing and transition economies: a literature survey," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 22(4), pages 585-631, October.
    11. Nyakundi M. Michieka & John Deal & Kyle Lahman, 2022. "Air pollution and income inequality: a spatial econometric approach," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 69(1), pages 1-31, August.
    12. Louis Dupuy, 2012. "International Trade and Sustainability : A survey," Working Papers hal-00701426, HAL.
    13. Sudeshna Ghosh, 2019. "Environmental Pollution, Income Inequality, and Household Energy Consumption: Evidence from the United Kingdom," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 10(02), pages 1-31, June.
    14. Louis Dupuy, 2012. "International Trade and Sustainability: A survey," Larefi Working Papers 201201, Larefi, Université Bordeaux 4.
    15. Baoxi Li & De Xiao, 2021. "The Impact of Income Inequality on Subjective Environmental Pollution: Individual Evidence from China," IJERPH, MDPI, vol. 18(15), pages 1-26, July.
    16. Feng Wang & Jian Yang & Joshua Shackman & Xin Liu, 2021. "Impact of Income Inequality on Urban Air Quality: A Game Theoretical and Empirical Study in China," IJERPH, MDPI, vol. 18(16), pages 1-17, August.
    17. Li, Baoxi & Cheng, Shixiong & Xiao, De, 2020. "The impacts of environmental pollution and brain drain on income inequality," China Economic Review, Elsevier, vol. 62(C).
    18. Faik Bilgili & Masreka Khan & Ashar Awan, 2023. "Is there a gender dimension of the environmental Kuznets curve? Evidence from Asian countries," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(3), pages 2387-2418, March.
    19. Dongjing Chen & Xiaotong Guo, 2023. "Impact of the Digital Economy and Financial Development on Residents’ Consumption Upgrading: Evidence from Mainland China," Sustainability, MDPI, vol. 15(10), pages 1-25, May.
    20. Alban Verchere, 2022. "Is social polarization bad for the planet? A theoretical inquiry," Bulletin of Economic Research, Wiley Blackwell, vol. 74(2), pages 427-456, April.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:plo:pone00:0257498. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: plosone (email available below). General contact details of provider: https://journals.plos.org/plosone/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.