Can financial technology development reduce household energy consumption? Evidence from China.

Abstract

This paper examines whether financial technology (FinTech) development affect household energy consumption. The proposed point that FinTech can reduce household energy consumption is theoretically discussed and empirically tested using data from the 2017 Digital Financial Inclusion Index, the 2018 China Family Panel Studies (CFPS), the 2018 China Environmental Statistical Yearbook and the 2018 China Science and Technology Statistical Yearbook. The results show that FinTech contributes to reducing household energy consumption. Several retests, including the instrumental variable, replacement sample and propensity score matching methods, prove its robustness. Mechanism tests show that investment in environmental governance and technological innovation promotion are the two main transmission channels. We also find that the reducing effect is more significant in the following groups: the low-middle income level classes, the eastern regional residents, those with bachelor's degrees and above, the those aged over 60 and rural residents. The outcomes of this paper call for government departments to positively guide FinTech development to reduce household energy consumption. From another perspective, the conclusions drawn from our analysis make a great reference value for countries and provide new ideas for Chinese carbon peaking and carbon neutralisation goals.