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Assessing the Effect of Digital Financial Inclusion on Provincial Sustainable Development in China from the Perspective of Synergistic Efficiency of Pollution Reduction and Carbon Abatement Based on DDF Measurement and a Bartik Instrumental Variable (2012–2022)

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  • Mingwei Song

    (School of Economics, Zhejiang Ocean University, Zhoushan 316100, China)

  • Pingkai Wang

    (School of Economics, Zhejiang Ocean University, Zhoushan 316100, China)

  • Mixue Liu

    (School of Economics, Zhejiang Ocean University, Zhoushan 316100, China)

  • Shibo Chen

    (Chinese Academy of Science and Technology for Development, Beijing 100038, China)

Abstract

Under the background of the “dual-carbon” goals and the ecological ecological-civilization-construction strategy, improving the synergistic efficiency of pollution reduction and carbon abatement is a key to promoting green high-quality development. Based on a panel of 30 provincial-level regions in China for 2012–2022, this paper evaluates the impact of digital financial inclusion on the synergistic efficiency of pollution reduction and carbon abatement. First, using a global-frontier directional-distance function (DDF), we characterize the improvement space of “desirable-output expansion—simultaneous contraction of pollution and carbon emissions” under given input constraints, and construct a synergistic efficiency indicator (eff_main). Second, we present a correlation benchmark within a two-way fixed-effects (TWFE) framework and use lead/lag (placebo) tests to probe potential endogeneity; we further construct a Bartik (shift–share) instrumental variable and employ Two-Stage Least Squares (2SLS) to strengthen causal identification. The results show that in TWFE regressions, digital financial inclusion (dif100) is positively and significantly correlated with synergistic efficiency, with a coefficient of 0.113 (i.e., an increase of 100 index points in the digital financial inclusion index is associated with an average increase of 0.113 in eff_main), but a significant lead effect is present, so this result should be interpreted as correlational only; 2SLS estimates indicate a robust positive causal effect of digital financial inclusion on synergistic efficiency, with a baseline coefficient of 0.405, rising to 0.501 under lagged specifications—exhibiting a dynamic feature of “gradual release in subsequent years.” The study suggests that developing digital financial inclusion helps raise regions’ comprehensive green-transition performance and sustainable development capacity; policy implications include accelerating the closing of digital infrastructure gaps, improving green-finance institutions and performance constraints, and guiding funds more effectively toward energy-saving, emission reduction and low-carbon technology areas.

Suggested Citation

  • Mingwei Song & Pingkai Wang & Mixue Liu & Shibo Chen, 2026. "Assessing the Effect of Digital Financial Inclusion on Provincial Sustainable Development in China from the Perspective of Synergistic Efficiency of Pollution Reduction and Carbon Abatement Based on DDF Measurement and a Bartik Instrumental Variable ," Sustainability, MDPI, vol. 18(5), pages 1-29, March.
  • Handle: RePEc:gam:jsusta:v:18:y:2026:i:5:p:2421-:d:1876453
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