Digital finance and the energy transition: Evidence from Chinese prefecture-level cities

Abstract

The increasing digitalisation of the financial sector can potentially steer cities towards carbon neutrality, especially through digital finance. We conduct a panel data analysis of Chinese prefecture-level cities from 2014 to 2020 using a spatial econometric model to explore the effect of digital finance on energy transition. Further, we explore the spatial spillover effect and its moderating mechanism. Our results confirm a significant positive correlation between digital finance and energy transition efficiency. Moreover, digital finance is found to engender positive spatial spillover effects on energy transition in neighbouring cities. Finally, the analysis of the moderating effect reveals that digital economy policies can amplify the positive correlation between digital finance and energy transition. This finding highlights the importance and positive role of digital finance in realising energy transition.