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Digital finance and sustainable development: Evidence from environmental inequality in China

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  • Guoxiang Li
  • Rong Zhang
  • Suling Feng
  • Yuqing Wang

Abstract

Achieving environmental equity is important for ensuring resource utilization efficiency and realizing sustainable development. Using panel data of 286 cities in China from 2011 to 2018, this paper analyzes whether financial support in the form of digital finance can mitigate environmental inequality. The findings indicate that (1) digital finance has a significant mitigating effect on environmental inequality. Digital finance development has a stronger industrial pollution emission reduction effect on high‐polluting regions than on low‐polluting regions and can reduce the environmental pollution gap between regions. The results of robustness tests such as an endogeneity test support this finding. (2) Digital finance development can have a stronger mitigating effect on environmental inequality in regions with a stronger local government governance capacity and environmental preferences. Digital finance can be a more significant inhibitor of environmental inequality in areas where industries transfer out due to their stronger needs for industrial transformation and finance. (3) Residential income and green technology innovation are important factors affecting industrial pollution emissions and reductions. Digital finance development can narrow the income gap between regions and promote the convergence of green technology innovation capacity, in turn alleviating environmental inequality. In the future, while continuing to promote the development of digital finance, it is necessary to improve the governance capacity of local governments, to increase the efficiency of resource utilization in places where industrial transfer is undertaken and to strengthen the role of financial support in industrial pollution control.

Suggested Citation

  • Guoxiang Li & Rong Zhang & Suling Feng & Yuqing Wang, 2022. "Digital finance and sustainable development: Evidence from environmental inequality in China," Business Strategy and the Environment, Wiley Blackwell, vol. 31(7), pages 3574-3594, November.
    • Handle: RePEc:bla:bstrat:v:31:y:2022:i:7:p:3574-3594
    DOI: 10.1002/bse.3105
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    3. Wei Yang & Qiuxia Chen & Qiuqi Guo & Xiaoting Huang, 2022. "Towards Sustainable Development: How Digitalization, Technological Innovation, and Green Economic Development Interact with Each Other," IJERPH, MDPI, vol. 19(19), pages 1-17, September.
    4. Geng Tian, 2022. "Influence of Digital Finance on Household Leverage Ratio from the Perspective of Consumption Effect and Income Effect," Sustainability, MDPI, vol. 14(23), pages 1-11, December.
    5. Sisi Zheng & Shanyue Jin, 2023. "Can Enterprises in China Achieve Sustainable Development through Green Investment?," IJERPH, MDPI, vol. 20(3), pages 1-25, January.
    6. Wang, Quan-Jing & Tang, Kai & Hu, Hai-Qing, 2022. "The impact of digital finance on green innovation: Evidence from provinces in China," Innovation and Green Development, Elsevier, vol. 1(1).
    7. Di, Danyang & Li, Guoxiang & Shen, Zhiyang & Song, Malin & Vardanyan, Michael, 2023. "Environmental credit constraints and pollution reduction: Evidence from China's blacklisting system for environmental fraud," Ecological Economics, Elsevier, vol. 210(C).
    8. Xianghua Yue & Shikuan Zhao & Xin Ding & Long Xin, 2022. "How the Pilot Low-Carbon City Policy Promotes Urban Green Innovation: Based on Temporal-Spatial Dual Perspectives," IJERPH, MDPI, vol. 20(1), pages 1-20, December.
    9. Qianqian Li & Qilin Liu, 2023. "Impact of Digital Financial Inclusion on Residents’ Income and Income Structure," Sustainability, MDPI, vol. 15(3), pages 1-20, January.
    10. lv, Kangjuan & Pan, Minjie & Huang, Li & Song, Daqiang & Qian, Xinlei, 2023. "Can intellectual property rights protection reduce air pollution? A quasi-natural experiment from China," Structural Change and Economic Dynamics, Elsevier, vol. 65(C), pages 210-222.
    11. Ozili, Peterson K, 2023. "Sustainable development and bank non-performing loans: are they correlated?," MPRA Paper 117807, University Library of Munich, Germany.
    12. Xing Zhang & Jian Zhong & Huanfang Wang, 2023. "Does the Development of Digital Economy Affect Environmental Pollution?," Sustainability, MDPI, vol. 15(12), pages 1-18, June.

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