Is the spatial impact of digital financial inclusion on CO₂ emissions real? A spatial fluctuation spillover perspective

Abstract

Digital financial inclusion (DFI) has the advantage of promoting information sharing, reducing transaction costs, and providing microloan platforms for small and medium-sized enterprises. It has also made outstanding contributions to decreasing CO₂ emissions. However, the volatility correlation between DFI and CO₂ emissions is still relatively unexplored. This research uses the spatial autoregressive process with conditional heteroscedastic errors (SARspARCH) model to evaluate the spatial fluctuation spillover impacts of DFI on CO₂ emissions in 284 Chinese cities covering the period 2011–2016 following the IPAT model. The results indicate that CO₂ emissions have significant spatial spillover and volatility effects. The fitted value of SARspARCH estimation results is more realistic than the SAR and spARCH model. DFI alleviates average CO₂ emissions in Chinese cities. Moreover, spatial volatility weakens the negative influence of DFI on average carbon emissions. This study provides insights from which governments can strengthen inter-regional communication and synergistic emission-reduction capabilities, and promote the digitization of the financial sector to achieve carbon neutrality goals.

Keywords

SARspARCH model / Spatial fluctuation spillover effect / CO₂ emissions / Digital financial inclusion (DFI) / China

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