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Digital finance, institutional quality, and air pollution: Evidence from China

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  • Li, Bo
  • Jia, Xuemei
  • Liu, Zhenya
  • Ma, Fengping

Abstract

Understanding the relationship between digital finance, institutional quality, and air pollution is crucial to crafting effective environmental policies, particularly in the context of China’s significant strides in the digital era. The study examines how institutional quality moderates the spatial effect of digital finance on air pollution in China. Using data from 30 provinces (2011–2021), it reveals that digital finance growth correlates with improving air quality and becomes more geographically concentrated over time. Institutional quality significantly strengthens digital finance’s positive spatial impact on air quality, especially in well-governed areas, with the indirect impact through institutional quality outweighing the direct one. The findings emphasize the importance of strong institutional quality for environmental management via digital finance.

Suggested Citation

  • Li, Bo & Jia, Xuemei & Liu, Zhenya & Ma, Fengping, 2025. "Digital finance, institutional quality, and air pollution: Evidence from China," Research in International Business and Finance, Elsevier, vol. 78(C).
    • Handle: RePEc:eee:riibaf:v:78:y:2025:i:c:s0275531925002533
    DOI: 10.1016/j.ribaf.2025.102997
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    Cited by:

    1. Wang, Qipeng & Liu, Yong, 2025. "Evaluating the impact of new energy demonstration city construction on urban air quality: Evidence from a DID analysis of Chinese cities," Energy, Elsevier, vol. 332(C).

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    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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