The impact of digital financial inclusion on carbon dioxide emissions: Empirical evidence from Chinese provinces data

Abstract

Green development is becoming increasingly important in current society. Many countries have set the goal for reducing energy consuming for green development. However, the green development needs the improvement of financial resources and financial services. Using the panel annual data of 30 Chinese provinces over the period 2013–2020, we find that digital financial inclusion has a negative impact on carbon dioxide emission. Our conclusion is still robust by using system General Method of Moments (GMM) method and Instrumental Variable regression (IV). Heterogeneity analysis shows that the development of digital finance inclusion in usage depth and digitization level contribute to the reduction of carbon dioxide emissions but the coverage breadth might not have the same effect. Moreover, the impact of digital finance inclusion on carbon dioxide emissions is more pronounced in the usage of digital finance inclusion in payment and investment. Regarding the effect of digital finance inclusion in different regions, we find that the impact of digital finance inclusion on carbon dioxide emissions is greater in central region of China which are moderately developed areas. Besides, by using panel Quantile Regression (QR), we find that digital financial inclusion has no obvious inhibitory effect on high carbon dioxide emission areas. Finally, mechanism test shows that the digital finance inclusion lowers the carbon dioxide emissions by reducing the per capita energy consumption and improving the per capital GDP. Our research suggests that government should support the development of digital inclusive finance and pay more attention to the development of digital finance inclusive in usage depth and digitization level, which will contribute to achieving the goal of carbon neutrality and the transition to a low-carbon economy.