Carbon reduction effects of digital financial inclusion: Evidence from the county-scale in China

All countries in the world are faced with varying degrees of environmental pollution problems and carbon reduction responsibilities. In the case of China, digital transformation emerges as a new growth catalyst for the future economy and a pivotal avenue for optimizing resource allocation, enhancing energy structure, and reducing energy dependence for development. Therefore, this study delves into the carbon reduction effect of digital financial inclusion and explores its pathways. It focuses initially on the counties of the Yangtze River Delta in China, utilizing nighttime light data to estimate carbon emissions and scrutinizing the spatial and temporal distribution characteristics of emissions. Empirical results reveal that digital financial inclusion positively influences carbon emission reduction, with notable spatial and temporal variations in the emission reduction effect. Furthermore, the study uncovers that digital financial inclusion contributes to reducing carbon emissions through the optimization of industrial structure and the promotion of technological innovation. These research findings offer a scientific foundation for guiding the government in developing digital finance to attain local carbon emission reduction targets. Concurrently, local governments should leverage the role of digital financial inclusion in optimizing industries and driving technological innovation to propel the low-carbon, sustainable development of China.