Spatial impact of digital finance on carbon productivity

Abstract

Low carbon productivity has been identified as a key direction for China’s future development. As an important driving force for economic growth, the question of whether digital finance that is reliant on digital technology can support the development of a low-carbon urban economy remains unresolved. Based on the carbon productivity measured by panel data from 201 cities for the period 2011–2020, this study applies the spatial Dubin model and threshold regression model to explore the impact of digital finance on carbon productivity, yielding the following key conclusions. First, the spatial distribution heterogeneity of carbon productivity in China’s eastern region is higher than that in the western region, and both productivity and digital finance are characterized by high (low)–high (low) dotted spatial agglomeration. Second, digital finance can significantly improve carbon productivity via two transmission channels: the human capital and marketization effects. At the same time, digital finance exerts a spatial spillover effect on carbon productivity, and rising local digital finance levels will increase carbon productivity in neighboring areas. Heterogeneity analysis indicates that the spillover effect of digital finance in urban agglomerations and eastern regions is more significant. Third, fixed-asset investment has a positive nonlinear moderating effect on digital finance, thus improving carbon productivity. When the per capita investment in fixed assets does not exceed 682.73 yuan, digital finance exerts only a limit pulling effect on carbon productivity; when it is higher than this value, the pulling effect is intensified.

Keywords

Digital finance / Carbon productivity / Spatial spillover effect / Fixed-asset investment / Spatial heterogeneity

CRediT authorship contribution statement

Huaping Sun: Conceptualization, Supervision, Writing – review & editing. Tingting Chen: Data curation, Writing – review & editing. Christoph Nedopil Wang: Supervision, Writing – review & editing.

Declaration of Competing Interest

The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.

Acknowledgement

The paper was supported by the National Natural Science Foundation of China (72243005) and the National Social Science Fund of China (21AZD067) and the Key Program of Collaborative Innovation Center for Emissions Trading system Co-constructed by the Province and Ministry in Hubei University of Economics (22CICETS-ZD005).

References

[] C. An, M. Lei. Research on carbon dioxide emissions, human capital and endogenous economic growth. China Manage. Sci., 5 (2019), pp. 149-160

[] C.K. Andyc, R.W. Yang, J.X. Zhang. Fixed investment and economic growth in China. Econ. Plan., 32 (1999), pp. 67-79

[] S.E. Barykin, S.M. Sergeev, I.V. Kapustina, A.A. Fedotov, V.A. Matchinov, E.D.L. Plaza, A.B. Mottaeva, A.V. Sharkova, A.Y. Borisova, A.E. Karmanova. Environmental sustainability and digital transformation of socio-economic: Quality of life perspective. JEAPM, 25 (1) (2023), p. 2350001,

[] E. Beinhoker, J. Oppenheim, B. Irons, M. Lahti, D. Farrell, S. Nyquist, J. Remes, T. Naucler, P.A. Enkvist. The Carbon Productivity Challenge: Curbing Climate Change and Sustaining Economic Growth. McKinsey & Company, New York (2008)

[] S.Y. Chen. Fluctuation and decline mode of carbon emission intensity in China and economic explanation. World Economy, 4 (2011), pp. 124-143

[] L. Chen, T.P. Wang, Y.M. Wu, J.Z. Xie. Government subsidies, digital finance and enterprise innovation-an empirical analysis based on information manufacturing listed companies. Contemporary Econ. Res., 1 (2022), pp. 107-117

[] T.F. Cooley, B.D. Smith. Financial markets, specialization, and learning by doing. Res. Econ., 52 (4) (1998), pp. 333-361

[] J.B. De Long, L.H. Summers, A.B. Abel. Equipment investment and economic growth: how strong is the nexus. Brook. Pap. Econ. Act., 2 (1992), pp. 157-199

[] R.R. Deng, A.X. Zhang. The influence and mechanism of digital finance development on carbon emission performance in China. Resource Science, 11 (2021), pp. 2316-2330

[] G. Fan, X.L. Wang, H.P. Zhu. China Marketization Index-2011 Report on the Relative Process of Marketization in Various Regions. Economic Science Press (2011)

[] J. Fang, Z.L. Wen, D.M. Liang, N.N. Li. Analysis of the moderating effect based on multiple regression. Psychol. Sci., 3 (2015), pp. 715-720

[] A. Focacci. Empirical analysis of the environmental and energy policies in some developing countries using widely employed macroeconomic indicator s: the cases of Brazil, China and India. Energy Policy, 4 (2003), pp. 543-554

[] Q.Z. Fu, Y.P. Huang. The heterogeneous impact of digital finance on rural financial demand: Evidence from China household finance survey and Peking University digital inclusive finance index. J. Financ. Res., 11 (2018), pp. 68-84

[] B.N. Guo, Y. Bu. Human capital, industrial structure and carbon emission efficiency in China-an empirical study based on SBM and Tobit model. Contemporary Economic Management, 6 (2018), pp. 13-20

[] F. Guo, T. Kong, J.Y. Wang. Analysis of spatial agglomeration effect of internet finance-evidence from internet finance development index. Int. Finance Res., 8 (2017), pp. 75-85

[] R. Hai, J.J. Heckman. Inequality in human capital and endogenous credit constraints. Rev. Econ. Dyn., 25 (2017), pp. 4-36

[] X.F. Han, W.F. Song, B.X. Li. Can the internet become a new kinetic energy to improve the regional innovation efficiency in China. China Industrial Economy, 7 (2019), pp. 119-136

[] B.E. Hansen. Threshold effects in non-dynamic panels: Estimation, testing and inference. J. Econ., 2 (1999), pp. 345-368

[] Y. Hao, Y.M. Liu. The influential factors of urban PM2.5 concentrations in China: A spatial econometric analysis. J. Clean. Prod., 112 (2016), pp. 1443-1453

[] W.J. He, W.Q. Li, M.L. Deng. Human capital, green scientific and technological innovation and total factor carbon emission efficiency of the Yangtze River Economic Belt. Science & Technology Progress and Policy, 9 (2022), pp. 23-32

[] M.B. He, X.W. Yang. Digital finance, carbon emissions and total factor productivity. Financial Forum, 2 (2021), pp. 18-25

[] M.J. Herrerias, V. Orts. Equipment investment, output and productivity in China. Empir. Econ., 42 (2012), pp. 181-207

[] S.C. Hu, Y.Y. Zhang, Y.K. Zhang. Digital finance, capital mismatch and regional income gap. Financial Science, 5 (2022), pp. 1-14

[] J.Y. Hu, X.F. Zhang. Study on the carbon emission reduction effect of financial technology and the regulatory role of green policy under the goal of “double carbon”. Modern Finance and Economics (Journal of Tianjin University of Finance and Economics), 1 (2023), pp. 3-16

[] X.B. Hui. Digital finance and urban green total factor productivity: internal mechanism and empirical evidence. Southern Finance, 5 (2021), pp. 20-31

[] Jalil, A., Feridun, M., 2011. The impact of growth, energy and financial development on the environment in China: acointegration analysis. Energy Economics 2.

[] R. Jia, S. Shao, L. Yang. High-speed rail and CO2 emissions in urban China: A spatial difference-in-differences approach. Energy Econ., 99 (2021), Article 105271

[] Y. Kaya, K. Yokobori. Environment, Energy, and Economy: Strategies for Sustainability. United Nations University Press (1997)

[] Le, G., 2016. Economic growth, market system and CO2 emissions-an empirical study based on emerging economies. Chinese and Foreign Entrepreneurs 4, 93-96+99.

[] D.S. Li, H.F. Xu, S.Y. Zhang. Financial development, technological innovation and carbon emission efficiency: theoretical and empirical research. Exploration of Economic Issues, 2 (2018), pp. 169-174

[] R.J. Li, L. Zhang, L.D. Zhao. China's clean energy use, factor allocation structure and carbon productivity growth-based on the production function of introducing energy and human capital. Resour. Sci., 4 (2016), pp. 645-657

[] L. Liao, M.R. Li, Z.W. Wang. Smart investors: incomplete market interest rate and risk identification-evidence from P2P peer-to-peer lending. Econ. Res., 7 (2014), pp. 125-137

[] F. Liu, J.Y. Sim, H. Sun, B.K. Edziah, P.K. Adom, S. Song. Assessing the role of economic globalization on energy efficiency: Evidence from a global perspective. China Econ. Rev., 77 (2023), Article 101897

[] C.L. Liu, M.Y. Yin, L. Huang. Based on polycentric analysis, the complementary spatial pattern of China's transportation network. Econ. Geogr, 10 (2018), pp. 21-28

[] W. Liu, Y.L. Zhang, Y. Wang. Has the development of digital finance alleviated relative poverty?. Econ. Manage., 7 (2021), pp. 44-60

[] J.H. Lu, X.D. Wei. Analysis framework, concept and path choice of digital divide governance for the elderly-based on the theoretical perspective of digital divide and knowledge gap. Population Res., 3 (2021), pp. 17-30

[] Y.Q. Lu, D.G. Zhang. Environmental decentralization, market segmentation and carbon emission. China Popul. Resour. Environ., 6 (2016), pp. 107-115

[] H.L. Ma, X.E. Qu. The impact of digital finance on high-quality economic development-analysis based on the perspective of rural human capital and digital divide. Economic Issues Exploration, 10 (2021), pp. 173-190

[] N. Mao, W.Z. Sun, Y.J. Yang, Z. Liu. Transportation infrastructure construction and digital transformation of enterprises-an empirical study of China's high-speed railway as an example. Research on Quantitative Economy, 10 (2022), pp. 47-67

[] H.W. Meng, H.P. Zhao, S.D. Zhang. Information infrastructure construction and regional digital entrepreneurship activity. J. Zhongnan Univ. Econ. Law, 4 (2022), pp. 145-160

[] T. Muganyi, L. Yan, Y. Yin, H. Sun, X. Gong, F. Taghizadeh-Hesary. Fintech, regtech and financial development: evidence from China. Financial Innovation, 8 (2022), p. 29,

[] A. Omri, S. Daly, C. Rault, A. Chaibi. Financial development, environmental quality, trade and economic growth: what causes what in MENA countries. Energy Econ., 48 (2015), pp. 242-252

[] M. Shahbaz, A.K. Tiwari, M. Nasir. The effects of financial development, economic growth, coal consumption and trade openness on CO2 emissions in South Africa. Energy Policy, 61 (2013), pp. 1452-1459

[] Shao, S., Zhang, K., Dou, J.M., 2019. Energy saving and emission reduction effect of economic agglomeration: theory and China's experience. Management World 1, 36-60+226.

[] S. Shao, L.L. Yang, M. Yu, M.L. Yu. Estimation, characteristics, and determinants of energy-related industrial CO2 emissions in Shanghai (China). Energy Policy, 10 (2011), pp. 6476-6494

[] Sun, Y.L., Li, G., Wang, X.Y., 2022. The impact of digital finance on labor misallocation and its heterogeneity analysis: Based on the panel data of China's prefecture-level cities. Studies in Science of Science 1, 47-56+138.

[] C.X. Sun, X.Z. Pei, C.J. Liu, Q.J. Bu. Spatial network characteristics and driving mechanism of logistics innovation in China. Geography Research, 5 (2021), pp. 1354-1371

[] A. Tamazian, J.P. Chousa, K.C. Vadlamannati. Does higher economic and financial development lead to environmental degradation: evidence from BRIC countries. Energy Policy, 37 (1) (2009), pp. 246-253

[] W.T. Tan, T. Cao. Do green technology innovation, renewable energy consumption and renewable energy investment improve environmental quality?. JEAPM, 3 (2022), p. 2250031

[] W.J. Wang, Q.F. Xiang. Evaluation of industrial structure adjustment and energy saving and emission reduction potential in China. China Industrial Economy, 1 (2014), pp. 44-56

[] Z.L. Wen, B.J. Ye. Mediation effect analysis: method and model development. Adv. Psychol. Sci., 5 (2014), pp. 731-745

[] Z. Xu, Y. Gao, Z.F. Huo. Pollution reduction effect of digital finance. Financial Science, 4 (2021), pp. 28-39

[] Y.L. Xu, Z.J. Sun, S. Li. Digital finance and traditional rural finance: Alternative or complementary? On the basis of the perspective of the relaxation of farmers' financing constraints. Financial Research, 6 (2022), pp. 34-48

[] F.G. Yao, T.H. Wang, L.P. Tan. The impact of digital inclusive finance on carbon emission efficiency-an empirical analysis from a spatial perspective. Financial Economics Research, 6 (2021), pp. 142-158

[] B.B. Yu. The economic growth effect of industrial structure adjustment and productivity improvement-based on the analysis of China urban dynamic spatial panel model. China Industrial Economy, 12 (2015), pp. 83-98

[] F.H. Zeng, S.Y. Xiao. The impact of digital finance on the efficiency of urban green economy. Statistics & Decision, 15 (2022), pp. 144-148

[] Z.X. Zhang. Peak carbon dioxide emissions, China and the world under the goal of carbon neutrality-green low-carbon transformation, green finance, carbon market and carbon border adjustment mechanism. People's Forum Academic Frontier, 14 (2021), pp. 69-79

[] W.L. Zhang, Z.H. Chong, X.J. Li, G.B. Nie. Spatial patterns and determinant factors of population flow networks in China: analysis on Tencent location big data. Cities, 99 (2020), Article 102640

[] F. Zhang, Y.M. Ning, X.Y. Lou. Competitiveness of China's urban agglomeration and its influence on regional differences. Geography Research, 7 (2019), pp. 1664-1677

[] Q. Zhang, J. Yang, Z.X. Sun, F. Wu. Analyzing the impact factors of energy-related CO2 emissions in China: what can spatial panel regressions tell us?. J. Clean. Prod., 161 (2017), pp. 1085-1093

[] X. Zhao, W. Tao, X. Ma, C. Wang, G. Mentel. Exploring the role of environmental regulation on energy security: contextual findings for sustainable development in Chinese provinces. Gondwana Res., 116 (2023), pp. 113-124

[] L.D. Zhao, L. Zhang, L. Xu, M.Z. Hu. Mechanism of human capital, industrial structure adjustment and green development efficiency. China Popul. Resour. Environ., 11 (2016), pp. 106-114

[] J. Zhao, Z.R. Zhao, H. Zhang. The impact of growth, energy and financial development on environmental pollution in China: New evidence from a spatial econometric analysis. Energy Econ., 93 (2021), Article 104506

[] M.C. Zhong, Y. Kong, S.R. Song. Dynamic relationship between income gap and environmental destruction in the process of development and catch-up —— empirical analysis of KC & EKC relation model. Soft Sci., 25 (2) (2011), pp. 1-6

[] T.Y. Zhou. Digital finance, factor price and labor mobility. Contemporary Economic Management, 4 (2022), pp. 77-87