Study on the Impact of Digital Finance on Carbon Emissions

Abstract

This paper explores the relationship between digital finance and carbon emissions using a Two-way Fixed Effects Model based on provincial panel data from 2011-2019. The empirical findings show that there is a significant positive contribution of digital finance to carbon emissions, but there is an inverted U relationship between the two. The mechanism analysis reveals that digital finance has a more significant impact on carbon emissions in areas with less optimized industrial structure. Further, it is found that the effect of digital finance on carbon emissions is heterogeneous in three dimensions of digital finance and in different regions. Finally, based on the above analysis, the corresponding policy recommendations are put forward. The findings of this paper not only enrich the literature on digital finance and carbon emissions, but also provide a reference significance for the relevant departments in China to develop digital finance and control carbon emissions.