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Digital financial inclusion and carbon neutrality: Evidence from non-linear analysis

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  • Lee, Chien-Chiang
  • Wang, Fuhao
  • Lou, Runchi

Abstract

To find out how digital financial inclusion affects carbon neutrality, this research analyzes its non-linear influence on carbon intensity and carbon sequestration via a sample of 277 cities in China from 2011 to 2017. Based on rigorous theoretical analysis and empirical testing, results show that the marginal impact of digital financial inclusion on carbon intensity first decreases and then increases, whereas the marginal impact of digital financial inclusion on carbon sequestration keeps decreasing. The marginal decrease is due to a limited financial audience, and the marginal increase is due to individual optimization and scale effects brought by a good external pulling force. The results of the mediating effect show that digital financial inclusion promotes the reduction of carbon intensity by increasing per capita disposable income and digitization, while such inclusion promotes the increase of carbon sequestration by means of green space and green technology. To refine the impact, we carry out heterogeneity analysis from two aspects and four instruments of finance as well as different characteristics of cities. From this, a series of subtle findings arise that are conducive to the implementation of specific policies. Finally, several methods prove the results' robustness, thus increasing the validation of this paper's core conclusion.

Suggested Citation

  • Lee, Chien-Chiang & Wang, Fuhao & Lou, Runchi, 2022. "Digital financial inclusion and carbon neutrality: Evidence from non-linear analysis," Resources Policy, Elsevier, vol. 79(C).
    • Handle: RePEc:eee:jrpoli:v:79:y:2022:i:c:s0301420722004172
    DOI: 10.1016/j.resourpol.2022.102974
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    Cited by:

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    5. Lee, Chien-Chiang & Wang, Fuhao & Lou, Runchi & Wang, Keying, 2023. "How does green finance drive the decarbonization of the economy? Empirical evidence from China," Renewable Energy, Elsevier, vol. 204(C), pages 671-684.
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    8. Wan, Jianjun & Lee, Chien-Chiang, 2023. "Corporate investment and the dilemma of the monetary policy: Evidence from China," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 106-121.
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    11. Zhao, Congyu & Jia, Rongwen & Dong, Kangyin, 2023. "Does financial inclusion achieve the dual dividends of narrowing carbon inequality within cities and between cities? Empirical evidence from China," Technological Forecasting and Social Change, Elsevier, vol. 195(C).
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