Deciphering the Impact of Digital Inclusive Finance on Carbon Emissions: Evidence from the Yangtze River Delta Cities

The rise in carbon emissions from human activities has intensified global ecosystem alterations, underscoring the need to achieve equilibrium between economic expansion and minimal carbon emissions. The Yangtze River Delta cities have experienced an increase in energy consumption and greenhouse gas emissions, highlighting the urgent necessity for green and sustainable economic development. Digital inclusive finance, including green credit and green finance, can help the region's economy and industry become more sustainable, reducing urban carbon emissions. This study employs a fixed-effects panel model to investigate the relationship between digital inclusive finance and urban carbon emission intensity. The analysis focuses on 27 central cities within the Yangtze River Delta, covering the period from 2011 to 2019. In addition, the underlying mechanisms for how digital inclusive finance affects urban carbon emissions will be explored. The study yielded the following findings:1) The emergence of digital inclusive financial services initially results in an uptick in carbon emissions, which is subsequently followed by a decline. Extended reach and intensified use are the main drivers of carbon emission reduction. 2) Digital finance impacts carbon emissions in different ways by city tier. It is relatively insignificant in lower tier cities, but significant in higher tier cities. 3) The carbon-reducing effect of digital inclusive finance is amplified by green technology, increasing its overall impact.