Does digital finance help reduce the marginal carbon abatement cost? Evidence from Chinese cities

<p>The carbon abatement effects of digital finance (DF) have been widely studied, but existing studies have neglected its impact on the marginal carbon abatement cost (CMAC). The paper uses the SBM model to measure the CMAC of 264 cities in China for 2011-2021 and then constructs a two-way fixed effects model and a panel spatial model to explore the nexus between DF and CMAC. The findings are as follows. Firstly, the magnitude of change in CMAC shows an N-shaped trend of increasing, decreasing, and rising over the sample period. Secondly, DF can decrease CMAC, which is mainly achieved through three paths: optimizing industrial structure, promoting green technological innovation, and improving green production efficiency. Thirdly, the suppression of CMAC by DF is better when the cities belong to eastern, northeastern, central, non-resource-based, and large cities. Fourthly, DF has negative spatial spillover effects on CMAC, which helps decrease CMAC in local and neighboring cities. These findings can help tap the green value of DF and formulate targeted regional carbon emission reduction policies.</p>