Driving sustainable growth by unlocking the power of digital finance functions: the moderation of environmental regulations

The rising concern of environmental challenge has derived the attention of decision-makers and other authorities. According to earlier research, the major cause of these environmental issues is a result of huge development into industrial and other sectors. Especially in developing economies like China, carbon emissions make the environment tense. In this setting, theoretical mechanisms suggest that digital finance is essential for controlling carbon emissions and making green innovations. As a result, we first try to figure out a connection between three different functions of digital financing and green innovation via carbon emissions. Importantly, we take into account of environmental regulations as a moderator. For this probe, we use several econometric tests such as fixed effect, generalized method of moment, and feasible generalized least square models on Chinese prefecture-level cities. After a series of tests, we unfold the importance of digital financing functions for controlling carbon emissions. We second pinpoint the significance of carbon emissions reduction for green innovation. We third unveil the concept of environmental regulations to further enhance green innovation. Notably, we unfold the advantages of environmental regulations as a moderator to reinforce the connection amid digital finance and green innovation as well as the association amid green innovation and carbon emission reduction. Hence, it is a new perspective in this digital age that entices authorities to enhance corporate social practices and lead toward a green economy. These findings can be a good example for the government and policymakers to sustainable environment through the function of digital technology.