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Green finance innovation, digital technology, and air pollution

Author

Listed:
  • Chen, Xiaoming
  • Wu, Huanting
  • Qian, Shufang
  • Wu, Dan

Abstract

Green finance policies serve as a critical nexus for balancing environmental and economic objectives. In this study, city-level panel data from 2011 to 2022 is employed and a difference-in-differences model is used to investigate the pollution abatement effects of green finance reform and innovation pilot zones on air quality and the underlying mechanisms. The findings reveal that the pilot policies significantly reduced PM2.5 concentrations in participating cities, a result that is robust against multiple robustness checks. Notably, digital technology adoption reduced the pollution-reducing effects of green finance policies, potentially because of the “scale expansion effect” and “long-tail effect”. Heterogeneity analysis indicates stronger policy efficacy in regions with higher levels of financial development, stricter environmental regulations, lower levels of industrial structure rationalization, and more severe air pollution. These results provide empirical evidence and policy insights for refining green finance approaches and coordinating digital and green transitions.

Suggested Citation

  • Chen, Xiaoming & Wu, Huanting & Qian, Shufang & Wu, Dan, 2025. "Green finance innovation, digital technology, and air pollution," Finance Research Letters, Elsevier, vol. 86(PC).
    • Handle: RePEc:eee:finlet:v:86:y:2025:i:pc:s1544612325018409
    DOI: 10.1016/j.frl.2025.108586
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    JEL classification:

    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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