Spatially uneven mitigation effects of digital financial inclusion on carbon emissions in China

How does digital financial inclusion affect households’ CO2? Micro-evidence from an emerging country

PurposeThis study examines the effect of digital financial inclusion (DFI) on climate change in African countries, taking into account the moderating effect of income inequality.Design/methodology/approachThis study employs panel data from 53 African countries between 2004 and 2021 and utilises the random-effects model and two-step generalised method of moments (GMM) to estimate the relationships amongst DFI, income inequality, CO2 emissions and renewable energy consumption (REC).FindingsOur findings reveal that increased accessibility to automated teller machines (ATMs) leads to a reduction in CO2 emissions and an increase in REC. However, the effect of ATMs on CO2 emissions is stronger for individuals with lower incomes, whereas REC is higher for those with higher incomes. Additionally, mobile cellular subscriptions (MCS) increase both CO2 emissions and REC; however, when income inequality is considered, it results in a reduction in CO2 emissions and an increase in REC. Furthermore, Internet usage reduces CO2 emissions and increases REC in Africa, with income inequality levels further improving its contribution.Practical implicationsATM accessibility and energy efficiency are means to mitigate carbon dioxide emissions and encourage the adoption of renewable energy sources.Originality/valueThis study is one of the first to explore the effects of income inequality on DFI, CO2 emissions and REC, highlighting its importance in Africa and its potential impact on environmental sustainability.

Is the spatial impact of digital financial inclusion on CO2 emissions real? A spatial fluctuation spillover perspective

Digital financial inclusion, resident consumption, and urban carbon emissions in China: A transaction cost perspective

Environmental regulation is a crucial tool for controlling environmental pollution. Digital finance is essential for the development of green finance. The relationship between environmental regulation and digital finance concerning environmental pollution is an issue worth exploring. This paper uses the spatial econometric model and the panel threshold model to empirically analyze the impact of environmental regulation and digital financial inclusion on environmental pollution using panel data from 30 Chinese provinces between 2011 and 2019. It mainly discusses the independent impact and synergy of environmental regulation and digital inclusive finance on environmental pollution. The research results show that the improvement of the intensity of environmental regulation and the development level of digital-inclusive finance can effectively alleviate the problem of environmental pollution. Moreover, environmental regulation and digital inclusive finance can coordinately control environmental pollution. A panel threshold analysis shows that as the intensity of environmental regulation increases, digital financial inclusion will reflect the function of environmental governance. Similarly, with the development of digital financial inclusion, environmental regulation has shown a significant inhibitory effect on environmental pollution. The results of a heterogeneity analysis show that the intensity of environmental regulation in the eastern region has a significant inhibitory effect on environmental pollution. Digital financial inclusion in the central region shows a strong environmental governance function. The intersection of environmental regulation and digital financial inclusion has shown a significant synergistic governance effect in the eastern region. Therefore, the government gives full play to the functions of environmental regulation and digital inclusive finance environmental governance to achieve coordinated governance of environmental pollution.

Introduction. The armed invasion of Ukraine by the Russian Federation has had terrible consequences not only for the population and infrastructure, but also for the environment. It is no coincidence that the environment is called a silent victim of war, requiring special comprehensive legal protection. Our future depends on preserving the environment. According to the latest data from the Ministry of Environmental Protection and Natural Resources of Ukraine, the environmental damage caused by Russiaʼs full-scale military operations amounts to $57 billion. More than half of this amount of environmental damage is due to air pollution from forest fires, missile attacks, and the burning of oil products. In addition, more than 1.2 million tonnes of harmful emissions were released into the atmosphere, contributing to the global climate crisis. To date, more than 265 war crimes against the environment and 14 cases of ecocide have been recorded. The aggressor state must be held accountable for all these actions, which destroy Ukrainian ecosystems and cause climate change, in accordance with the norms and principles of international law. That is why the President of Ukraine V. Zelenskyy proposed the «Peace Formula», a plan to end the war, with a separate clause aimed at preserving the Ukrainian environment and bringing Russia to international responsibility for environmental crimes committed during the international armed conflict. The aim of the article. The purpose of this article is to define the peculiarities of the Ukrainian «Peace Formula» implementation in the context of environmental protection and counteracting climate change. Results. The President of Ukraine V. Zelenskyy presented the «Peace Formula», the environmental component of which was embodied in paragraph 8. The «Peace Formula» focuses on three main areas of ensuring environmental safety and counteracting the environmental consequences of war. Firstly, it is an assessment of the environmental damage caused, including the impact on human health and biodiversity. Secondly, it is a thorough preparation of the evidence base and finding ways to bring the aggressor state to international responsibility for environmental damage. Third, it is the protection, preservation and restoration of the environment as part of the transition to a «green» economy. The restoration of the Ukrainian environment should include such measures as: land reclamation and demining; revival of destroyed forests and nature reserves; water purification; creation of new national parks and protected areas, etc. According to V. Zelenskyy, the «Peace Formula» is a platform not only for a just end to Russia’s armed aggression against Ukraine. It can become a universal basis for ending other military conflicts in the world and overcoming global problems. Russiaʼs armed aggression against our country poses numerous challenges to all of humanity — from the threat of a nuclear catastrophe and undermining food security to the intensification of anthropogenic climate change factors. The International Working Group on the Environmental Consequences of War reaffirms its readiness to work in the key areas, identified in paragraph 8 of the «Peace Formula», despite the existing gaps. Over the next year, it plans to promote its recommendations for Ukraineʼs transition to a greener future, protecting its environment and achieving justice for environmental damage. During the international forum «United for Justice. United for Nature», the Minister of Environmental Protection and Natural Resources of Ukraine R. Strilets presented the International Environmental Declaration. It should help develop common tools for all states to assess environmental damage and bring any aggressor state to international responsibility. According to the minister, the Environmental Declaration should enshrine the legal status of the Global Platform for Assessing the Damage Caused to the Climate and Environment by Military Actions. It is worth reminding that V. Zelenskyy announced the need for its creation at the 27th UN Climate Change Conference in 2022. This initiative is reflected in paragraph 8 of the Ukrainian «Peace Formula». Conclusions. The «Peace Formula» is an important initiative of the President of Ukraine V. Zelenskyy aimed at ending the Russian-Ukrainian war by combining joint efforts of states to protect and preserve the environment, prevent ecocide during hostilities, and combat climate change. It drew the international communityʼs special attention to the extent of the damage to the Ukrainian environment and climate that must be eliminated and compensated by the aggressor state. Together with our international partners, our country continues to work on the implementation of paragraph 8 of the «Peace Formula». In order to implement the environmental component of the «formula», Ukraine developed the Environmental Declaration, which was first presented at the International Forum «United for Justice. United for Nature» and later at the 28th UN Climate Change Conference. This document should become the basis for intergovernmental cooperation in the field of environmental protection and combating climate change in the context of Russiaʼs armed aggression against Ukraine. Its positive assessment by the international community shows that our country is moving in the right direction on the path to restoring environmental justice. The «Peace Formula» should become a driving force for fundamental changes in environmental protection during international armed conflicts. Key words: war crimes, environmental damage, ecocide, climate crisis, UN Climate Change Conference, international responsibility, post-war environmental restoration.

With the deep integration of Internet technology and finance, digital finance has become an indispensable part of inclusive finance and an important driving force for the development of inclusive finance. How inclusive finance affects household wealth under the background of digital penetration has become a hot issue. Based on the advantages of digital finance, this paper compares the differences between traditional and digital inclusive finance, and discusses the mechanism and effect of digital inclusive finance in promoting household wealth.Based on the panel data of China Family Panel Studies（CFPS）, this paper finds that digital inclusive finance helps to increase the level of household wealth, and has greater inclusiveness and a stronger leverage effect than traditional finance. This conclusion is further confirmed by 2SLS test with “geographical distance” as the instrumental variable. Different business types of digital inclusive finance have different promotion effects. Monetary fund, electronic payment and other business types have obvious promotion effects on the overall household wealth. Insurance, credit, online investment and electronic credit also have certain positive effects on the overall wealth, but the impact is small. According to the results of heterogeneity test, the effect of digital inclusive finance on household wealth in the central and western regions is stronger than that in the eastern regions; the role of digital inclusive finance in promoting the increase of household wealth depends on the family’s education level and understanding ability, and has a stronger role in promoting the families with high education level and high understanding ability. The degree of digitalization has a significant negative impact on the overall household wealth, which may be related to the phenomenon of “digital exclusion” in digital inclusive finance. Digital exclusion may weaken the role of digital inclusive finance in promoting the growth of household wealth to a certain extent.The research shows that in order to play the positive role of digital inclusive finance in benefiting the real economy and promoting the growth of household wealth, government departments should promote the deep integration of digital finance and traditional finance, give full play to the respective advantages and characteristics of digital finance and traditional finance, and build a complementary and mutually reinforcing financial service system.This study expands the existing research in three aspects: First, based on the background of digital penetration into the financial field, it examines the mechanism and function of digital inclusive finance on household wealth. Second, it compares and tests the differences between digital inclusive finance and traditional inclusive finance in promoting household wealth. Third, it tries to use geographical distance as an instrumental variable to overcome endogeneity and carry out comprehensive heterogeneity analysis.

Can digital financial inclusion affect CO2 emissions of China at the prefecture level? Evidence from a spatial econometric approach

The role of digital financial inclusion in economic development has been widely appreciated, and its carbon emission mitigating effect on the household sector needs to be noticed. This study investigates the impact of digital financial inclusion on household carbon emissions based on panel data for 30 Chinese provinces from 2011 to 2020. The results show that digital financial inclusion has a significant and robust mitigation effect on household carbon emissions and that digital financial inclusion impacts mainly from the breadth of coverage and the degree of digitization. The heterogeneity test results show that this mitigation effect is mainly found in the central and western inland regions as well as in the northern regions with high winter heating demand. In addition, this mitigation effect is mainly found in urban rather than rural areas. The results of the mechanism analysis show that digital financial inclusion reduces household carbon emissions through two pathways, electricity consumption and natural gas consumption share, and no significant mediating effect is observed for residential consumption share. The results of this study shed light on the relationship between digital financial inclusion and carbon emissions in the household sector and provide a reference for decision-making to address household carbon emission mitigation in China.

Digital financial inclusion and common prosperity are pivotal elements in promoting the sustainable socioeconomic development of China. This study introduces a novel Multi-Criteria Decision Analysis (MCDA) method to evaluate the Common Prosperity Index (CPI). Using this index, alongside the Digital Financial Inclusion Index (DFII) released by Peking University, it examines the evolution of the coupling coordination relationship between digital financial inclusion and common prosperity within the Yangtze River Delta (YRD) urban agglomeration from 2011 to 2021. By integrating gravity models and social network analysis, in this paper, we thoroughly investigate the spatiotemporal evolution characteristics of the spatial network of this coupling coordination relationship. The results indicate that both the DFII and CPI generally exhibit an upward trend, but the decline in the coupling degree reflects a weakened interaction strength between them. Specifically, Anhui significantly lags behind Jiangsu, Zhejiang, and Shanghai in the development of digital financial inclusion and common prosperity, indicating regional development imbalances. Furthermore, the strength of spatial connections in city coupling coordination has significantly increased, with Nanjing’s siphon effect on cities in Anhui becoming markedly stronger, and the number of core cities in the network increasing, which demonstrates a geographical proximity feature in network development. Additionally, the overall network characteristics are transitioning towards higher density and “small-world” properties, suggesting a trend toward network stabilization. The disparity in centrality among cities has decreased, with an overall enhancement in centrality, where the spatial spillover effects from core areas such as Hangzhou-Ningbo, Nanjing-Changzhou, and Shanghai-Suzhou-Wuxi significantly promote the development of peripheral cities. Based on these findings, this paper proposes policy recommendations for the sustainable development of digital financial inclusion and common prosperity in the YRD region.

Digital Financial Inclusion and Economic Growth: A Cross-country Study

Khera et al. (2022) provides a novel measurement of digital financial inclusion using a three-stage principal component approach (PCA) for 52 emerging market and developing economies. Based on this new index, they have found that the adoption of digital financial services has been a key driver of financial inclusion, and countries/regions in Africa and Asia and regions have achieved greater progress. They also warn against a digital divide and call for policies to close the gap. The novelty of this new index rests on three characteristics: it is focused; it is comprehensive, and it utilizes the PCA approach. This index focuses on the payment aspects of financial inclusion, and considers the “access” and “usage” aspects of both digital and traditional aspects of financial inclusion. The three-stage PCA approach first extracts the supply-side and demand-side aspects of financial inclusion for both traditional and digital financial services, then extracts the principal components of the access and usage indices for the traditional and digital financial inclusion, respectively, and finally builds up a comprehensive index encompassing all these subcomponents. The constructed index provides a good chance to measure the level of the adoption of digital financial services in a specific country, and hence provides an instrument for evaluating the policy implications of financial inclusion, especially digital financial inclusion. For example, the subindex provides a chance to evaluate the severeness of the digital divide and the risk of financial exclusion. The indices show wide variations in digital financial inclusion across countries, whether it is mainly driven by a reluctance in constructing more digital financial infrastructure due to financial constraints, or a distrust of digital technology will need further investigation. Overall, this index has great potential for deepening our understanding of the relationships between comprehensive financial inclusion, digital financial inclusion as well as traditional financial inclusion. In this aspect, Khera et al. (2022) may wish to provide more discussions so that the importance of subindices can be better appreciated. For example, Khera et al.’s Figures 1 and 2 indicate that African countries excel in digital financial inclusion, so it would be insightful to explain which of the access and the usage components are relevant in promoting the development in digital financial inclusion. Another example is Khera et al.’s Figure 3 that contains the interesting finding, namely, for countries with low traditional financial inclusion, the variance of traditional financial inclusion is larger than the variance of countries with high-traditional financial inclusion. This implies that efforts in pursuing digital financial inclusion vary more in countries with low levels of traditional financial inclusion. Some additional empirical evidences may also help to convince readers about the validity of this index. For example, Khera et al.'s (2022) Figure 3 ranks Mongolia as the most advanced country in terms of both comprehensive as well as digital financial inclusion, and their Figure 4 shows that Ghana ranks No. 1 in improvements of digital financial inclusion. Presentations of some statistics about access and usage, and the development in traditional financial inclusion between 2014 and 2017 of these two countries would be helpful. Some robustness checks may also help readers and users to appreciate the importance of this index. For example, one way to construct the index is to apply the PCA approach to all the variables in one stage instead of in three stages. Such a strategy can avoid the prediction errors caused by treating the first-stage and second-stage indices directly as raw data, and can also provide readers with a broader view about the financial inclusion status quo.

Digital inclusive finance has an essential impact on improving the urban green economy efficiency by demonstrating environmental friendliness in agglomerating factors and promoting the flow of factors. Based on the panel data of 284 cities in China from 2011 to 2020, this paper uses the super-efficiency SBM model with undesirable outputs to measure the urban green economy efficiency. Then, the fixed effect model and spatial econometric model of panel data are used to empirically test the impact of digital inclusive finance on urban green economic efficiency and its spatial spillover effect, and the heterogeneity analysis is carried out. This paper draws the following conclusions. (1) The average value of urban green economic efficiency of 284 Chinese cities from 2011 to 2020 is 0.5916, showing a "high in the east and low in the west." In terms of time, it showed a rising trend year by year. (2) Digital financial inclusion and urban green economy efficiency have a high spatial correlation, both showing "high-high" and "low-low" agglomeration characteristics. (3) Digital inclusive finance significantly impacts urban green economic efficiency, especially in the eastern region. (4) The impact of digital inclusive finance on urban green economic efficiency has a spatial spillover effect. In the eastern and central regions, digital inclusive finance will inhibit the improvement of urban green economic efficiency in adjacent cities. In contrast, it will promote urban green economy efficiency in the western regions in adjacent cities. (5) The coverage and depth of digital inclusive finance significantly affect the urban green economy efficiency, while the level of digitization has yet to show a significant effect. This paper puts forward some suggestions and references for promoting the coordinated development of digital inclusive finance in various regions and improving urban green economic efficiency.

This paper aims to examine the complex relationship between digital financial inclusion, monetary policy transmission, and economic development in 18 Sub-Saharan African countries from 2004 to 2021. The study utilizes panel data and employs a digital financial inclusion index, broad money growth, and real gross domestic product per capita as proxies for digital financial inclusion, monetary policy transmission, and economic development, respectively. The panel autoregressive distributed lag model results uncover a bi-directional causality between economic development and digital financial inclusion, emphasizing the pivotal role of digital financial inclusion in fostering economic development. Additionally, another bi-directional causality between digital financial inclusion and monetary policy transmission highlights their interdependence. Unidirectional causality from monetary policy transmission to economic development is also established. This study emphasizes the crucial role of robust measures in enhancing digital financial inclusion to avert adverse consequences, offers nuanced insights into policy dynamics, particularly regarding inflation mitigation, and enhances monetary policy effectiveness. These findings underscore the importance of policy reform, legislation, and regulatory improvements to promote digital financial inclusion by Sub-Saharan African central banks. Strengthening rural financial infrastructure is crucial for driving digital financial inclusion, sustainable economic development, and reducing regional inequalities.

PurposeThis paper examines the impact and mechanism of China's digital inclusive finance on rural consumption upgrade. First, the impact of the development of digital inclusive finance on the upgrading of rural household consumption structure is to be theoretically analyzed and empirically tested. Secondly, in terms of heterogeneity analysis, it pays attention to the age heterogeneity of users that digital inclusive finance influencing rural residents' developmental consumption upgrade, which is related to the issue of intergenerational “digital gap”. Thirdly, the mechanism of digital inclusive finance in promoting rural consumption upgrade is to be investigated. Finally, how to promote the role of digital inclusive finance in upgrading the structure of rural consumption to a developmental demand level will be showed.Design/methodology/approachFrom the perspective of the micro-household, this study is conducted by using the instrumental variable (IV) method, with 2SLS model and IV-Tobit model, based on the matched city-level data of Digital Inclusive Financial Index (DIFI) with the Chinese Household Financial Survey (CHFS). “The relief degree of land surface” is an ideal instrumental variable of digital inclusive finance, for including regional altitude difference and terrain factors of regional area, has theoretical influence on the development of digital inclusive finance, and is not affected by other economic variables.FindingsThe conclusions show that the digital inclusive finance plays a significant role in promoting the rural households' developmental consumption, but has no significant effect on the rural households' survival-type consumption and hedonistic consumption. Furthermore, this paper examines the impact and mechanism of China's digital inclusive finance on rural consumption upgrade. First, the impact of the development of digital inclusive finance on the upgrading of rural household consumption structure is to be theoretically analyzed and empirically tested. Secondly, it is discovered that digital inclusive finance is age heterogeneous in promoting the upgrade of consumption structure of rural household, and its effect on the elderly is weaker than that on the young for the intergenerational “digital gap”. Thirdly, these conclusions reveal that the digital inclusive finance does affect the consumption of rural residents through three mechanisms: increasing income and wealth, easing liquidity constraints and facilitating payment methods. Finally, how to promote the role of digital inclusive finance in upgrading the structure of rural consumption to a developmental demand level will be showed.Originality/valueThe current research on the relationship between digital inclusive finance and rural consumption only stays at the level of total rural consumption and has not stressed the structural problems of rural consumption. Can digital inclusive finance promote the upgrade of rural consumption structure? To what level can digital inclusive finance promote the upgrading of rural consumption structure? Therefore, it is of great theoretical value to study the upgrading of rural consumption structure from the micro level. Can the current digital inclusive finance benefit the elderly and help break the vulnerability of the elderly to enjoy finance? In this regard, evidence of heterogeneity remains to be provided.