Has digital finance widened the income gap?

Obscuring effect of income inequality and moderating role of financial literacy in the relationship between digital finance and China's household carbon emissions

Households have emerged as one of the primary sources for carbon emissions in China, thus posing challenges to the "dual carbon" objectives. Digital finance, an emergent form of industry that fused advanced technology with financial services, had a pronounced impact on household carbon emissions stemming from daily consumption. However, the mechanisms driving this impact have not been adequately examined. Based on micro-level household survey data across 25 Chinese provinces from 2012, 2014, 2016, and 2018, the study identified the chief channels via which digital finance affected household carbon emissions, deriving several key findings. First, digital finance augmented household carbon emissions, presenting a significant negative impact on the climate. Second, due to the existence of "digital divide" between rural and urban areas, the impact of digital finance was more subdued in rural areas. Additionally, the effects of digital finance were more pronounced in the affluent eastern provinces. Third, income mobility obscured the positive relationship between digital finance and household carbon emissions. This is primarily attributed to the urban-rural divide in China; taking into account that urban-to-rural transfers make income distribution more equitable, there is a counterintuitive drop in per capita consumption, thereby suppressing consumption-related carbon emissions. This presented the conundrum of "income distribution equality-consumption negativity". Finally, financial literacy was identified as a crucial positive moderating role, enabling households with high financial literacy to harness the dividends of digital finance, thereby engaging in more diversified consumption activities and intensifying the negative impact of digital finance on carbon emissions. The findings reinforced the pivotal role of digital finance in bolstering efforts to combat climate change and ensuring environmentally-responsible economic advancements.

Has the digital economy improved income inequality for ethnic minorities? The case of China

This paper examines how China's ethnic minorities' income equality has changed due to the digital economy's development. The study focuses on the critical analysis of the legal system by juridical analysis combined with doctrinal and textual analysis. Furthermore, the article makes the argument convictive by developing econometric models and heterogeneity analysis. Through a dialectical discussion, this paper shows a shared understanding of what the term "digital economy" means in Chinese society, and that income equality for ethnic minorities in the digital economy has both positive and negative effects. On the one hand, the digital economy is conducive to raising income levels and reducing the income gap between Han Chinese and ethnic minorities; however, on the other hand, the digital economy exacerbates the income gap between Han Chinese and ethnic minorities among low-income groups. As a result, disputes over income equality for ethnic minorities in the digital economy are more pronounced among low-income groups. The institutional causes of these problems include the inadequacy of China's digital economy policies for ethnic minorities and the shortcomings of China's legal system for labor protection. The Chinese government should renew the Chinese Constitution, labor law, and employment protection policies to improve the present situation. Based on China's experience, other countries should have pragmatic attitudes to revise the laws and regulations and explore some target measures, such as the digital services tax, to help ethnic minorities.

Can financial technology development reduce household energy consumption? Evidence from China

This paper examines whether financial technology (FinTech) development affect household energy consumption. The proposed point that FinTech can reduce household energy consumption is theoretically discussed and empirically tested using data from the 2017 Digital Financial Inclusion Index, the 2018 China Family Panel Studies (CFPS), the 2018 China Environmental Statistical Yearbook and the 2018 China Science and Technology Statistical Yearbook. The results show that FinTech contributes to reducing household energy consumption. Several retests, including the instrumental variable, replacement sample and propensity score matching methods, prove its robustness. Mechanism tests show that investment in environmental governance and technological innovation promotion are the two main transmission channels. We also find that the reducing effect is more significant in the following groups: the low-middle income level classes, the eastern regional residents, those with bachelor's degrees and above, the those aged over 60 and rural residents. The outcomes of this paper call for government departments to positively guide FinTech development to reduce household energy consumption. From another perspective, the conclusions drawn from our analysis make a great reference value for countries and provide new ideas for Chinese carbon peaking and carbon neutralisation goals.

Can digital inclusive finance promote agricultural green development?

Digital inclusive finance (DIF) provides new momentum for green agricultural development (AGD). This paper measured AGD with entropy weight TOPSIS in five dimensions, including resource conservation, environmental friendliness, ecological conservation, green supply, and economic growth. After that, it estimated the regional spillover effects and threshold impacts of DIF on AGD utilizing China's provincial panel data from 2011 to 2020. The paper shows that (1) DIF and AGD have such a U-shaped complex interrelationship; (2) the AGD is spatially impacted by DIF. The unique manifestation is that as DIF has increased, its effect on AGD has steadily changed from being direct to being indirect, and this effect has regional heterogeneity; and (3) in regions with higher levels of green technology innovation, better development of traditional finance, or relatively concentrated agricultural industries, DIF plays a more prominent role in promoting the AGD.

Digital finance and M&As: An empirical study and mechanism analysis

With the rapid growth and wide application of digital technology, enterprises have entered the digital era with both opportunities and challenges existing. Mergers and acquisitions are one of the most efficient ways to integrate resources and achieve profit growth, giving enterprises advantages in competing in the new mode of economic growth. Based on this, this research tries to explore whether the development of digital finance will contribute to the emergence of M&As activities through combining M&As data of the Chinese stock market with the digital finance inclusion index between 2012 and 2020. The results show that the development of digital finance largely influences M&As activities through lower acquirers' financial constraints. We further replace digital finance with three sub-indexes including coverage breadth, usage depth, and digitalization level to explore the impact of different dimensions of digital finance on M&As. Results show that coverage breadth plays a more important role. In addition, heterogeneity tests reveal that the relationship between the development of digital finance and M&As activities varies significantly. The influences of digital finance on private and western and central enterprises are more significant compared with state-owned and eastern enterprises. According to the study, since the development of digital finance can be an efficient way to ease financial constraints and boost M&As activities, the government should promote the development of digital finance while companies strive to make the most use of it.

Is the development of digital finance conducive to reducing haze pollution? Empirical evidence from 284 cities in China

Using the panel data of 284 cities from 2011 to 2020 in China, this research statistically tests the direct impact and internal mechanism of digital finance on urban haze pollution. The results show the following: (1) the development of digital finance can significantly inhibit the concentration of urban haze, and there is a stronger inhibitory effect in areas where the government pays more emphasis to haze pollution and in cities with high levels; (2) after mechanism inspection, it is found that digital finance can indirectly promote urban haze pollution by influencing green innovation, cooperative innovation, industrial structure upgrading, and producer service agglomeration; (3) the results of the spatial econometric analysis show that digital finance can suppress the haze concentration in the region and simultaneously inhibit the neighboring areas through spillover effects; (4) further inspection shows that the spatial spillover effect of digital finance on haze pollution has an obvious spatial attenuation feature, demonstrating that a dense area of spatial spillover is within 310 km. The spillover effect gradually disappears when the threshold is exceeded.

Digital finance and regional green innovation: evidence from Chinese cities

Digital finance realizes the combination of finance and technology, makes up for many deficiencies of traditional finance, and brings opportunities for green and innovative development. However, systematic research on regional digital finance and green innovation is still lacking. Based on this, this study aims to analyze the impact of digital finance on the regional level of green innovation. For the analysis, the fixed-effect model, the mediating effect model, and the moderating effect model are used to perform regression on the panel data of Chinese cities. The results show that digital finance can significantly improve the level of regional green innovation. Improving the level of regional green financial services is its main mechanism, but the intermediary role of industrial structure optimization and upgrading fails to pass the test. In addition, the results of heterogeneity analysis show that digital finance plays a greater role in promoting green innovation in areas with high levels of traditional financial supply and Internet infrastructure construction. It is worth noting that digital finance does not really play the role of universal benefit, widening the regional green innovation gap. The main contributions of this study are to prove the positive effect of digital finance on green innovation at the regional level, clarify its transmission mechanism and urban heterogeneity analysis, and find that the current digital finance cannot bridge the gap of regional green innovation.

The nexus between digital finance and carbon emissions: Evidence from China

Finance is significant support for the low-carbon transformation of the real economy, in which digital finance as a new direction of financial development exerts a significant influence on carbon emissions. Therefore, it is crucial to investigate the association between digital finance and carbon emissions in order to develop carbon reduction strategies from the financial side. For this purpose, using the sample set covering 30 provincial areas during 2011–2020, this paper investigates the direct, indirect, and non-linear effects of digital finance on carbon emissions by applying fixed effects, mediating effects, and threshold effects analysis techniques. The results indicate that: (1) digital finance can significantly mitigate carbon emissions at the national level. (2) Digital finance inhibits carbon emissions as it drives green technological innovation and industrial structure upgrading. (3) Significant regional heterogeneity is observed in the effect of digital finance on carbon emissions, i.e., the effects of digital finance on carbon emissions are higher in the east-central region than in the overall sample, while the opposite is true in the western region. (4) The dampening effect on carbon emissions steadily increases as digital finance levels cross the first and second thresholds, respectively. Based on the above considerations, policymakers shall not only develop differentiated digital finance initiatives, but shall also fully unleash carbon emission reduction potential by rationalizing and optimizing industrial layout and strengthening financial subsidies for green technology innovation.