How does digital finance influence urban inclusive green growth? Empirical evidence from China

As a cutting-edge financial paradigm, digital finance broadens the scope and improves accessibility of financial services considerably, which is essential for fostering green growth. Using panel data from 265 Chinese cities spanning 2012 to 2020, this study examines the causal mechanisms by which digital finance affects urban inclusive green growth (UIG) through a combined analytical approach incorporating fixed effects models and mediation and moderation analyses. The relevant findings are fourfold. First, digital finance makes it easier for individuals to simultaneously accomplish ecological and economic goals, which promotes inclusive green growth in cities. The outcomes remain robust when endogeneity issues are considered. Second, heterogeneity analysis reveals that digital finance reduces regional inequity by exerting a stronger effect on green growth in less developed areas. Third, the expansion of digital finance in nearby cities can have a spatial spillover effect. Fourth, the findings highlight green innovation and industrial upgrading as two significant ways in which digital finance indirectly supports green growth. Moreover, stricter environmental regulations have a more significant influence on the digital finance–inclusive green growth effect, which emphasises the critical influence of well-designed environmental policies. The empirical findings provide valuable insights for achieving the combination of digital finance and urban green growth.