“Cooperation” or “competition”: Digital finance enables green technology innovation—a new assessment from dynamic spatial spillover perspectives

Abstract

Green technology innovation is crucial in promoting the establishment of a green economic system. Digital finance is vital in supporting green technology innovation by combining finance and technology to extend the boundaries of financial services. This study constructs a theoretical framework by extending the Solow growth model and introduces a dynamic spatial Durbin model to investigate how China's green technology innovation is impacted by digital finance performance. Our results show that digital finance positively affects green technology innovation in local cities and hinders environmental technology improvement in nearby cities, resulting in unfavorable externalities. The mechanism check shows that digital finance motivates green technology innovation by expanding the scale of consumption, promoting industrial upgrading, and strengthening government support. The positive effects of digital finance on environmental technology improvement are prominent in regions with higher levels of digital finance, particularly in China's eastern and central regions. The degree of digitization and the depth of usage have notable positive impacts on green technology progress. Our findings provide important decision-making references on sustainable growth and have some significance for eliminating the digital development gap between regions and promoting innovation-driven development strategy.