Digital financial development, synergistic reduction of pollution, and carbon emissions: evidence from biased technical change

Spatio-temporal effects of digital inclusive finance on the synergy between CO2 and air pollution emissions in 251 Chinese cities

Achieving the synergistic reduction of CO2 and air pollution emissions (SRCAPEs) holds great significance in promoting the green transformation. However, limited research has been conducted on the spatio-temporal impact of digital inclusive finance (DIF) on the synergy between CO2 and air pollution emissions (SCAPEs). To address this gap, we comprehensively employ the linear regression model, geographically and the temporally weighted regression (GTWR) model, and the ordered probit model to empirically analyze the influence of DIF on SCAPE. Our research reveals the following: (1) The linear regression model demonstrates that, on average, DIF can achieve a weak synergistic emission reduction effect. This result remains robust after a battery of robustness tests. (2) The GTWR model reveals that the impact of DIF on both emissions exhibits evident spatio-temporal characteristics. Its emission reduction effect gradually increases, especially after 2014. (3) On the basis of the estimates from the GTWR model, we can identify four distinct synergy types driven by DIF. The number of cities with the preferred type (i.e., achieving SRCAPE) increases the most, from 59 in 2011 to 233 in 2019. (4) On the basis of the built ordered probit models, green technology innovation is an important path for DIF to achieve synergistic emission reduction. The synergistic emission reduction effect is also significantly moderated by the regional economic level and environmental regulation intensity. Our findings have policy implications for central and local governments in achieving SRCAPE and support efforts to achieve sustainable development.