Green fintech contributes to environmental sustainability—based on empirical evidence from China

On the basis of data from 274 prefecture-level cities in China from 2011 to 2022, we use two-way fixed effects and threshold models to assess the impact of green financial technology on carbon emission efficiency. The results indicate that green fintech significantly enhances carbon efficiency, primarily by driving green innovation and advancing artificial intelligence technologies. Heterogeneity analysis reveals that this promoting effect is more pronounced in western regions, nonlow-carbon pilot cities, areas with lower digital infrastructure, areas with higher coal consumption ratios, and areas with low greening level, suggesting that green fintech provides crucial support for economic transition and emission reduction in less developed or carbon-intensive areas. However, the study also identifies a nonlinear relationship: the positive effect of green fintech on carbon efficiency exhibits diminishing marginal returns, indicating that its contribution gradually weakens as green fintech itself develops. Furthermore, while green fintech facilitates low-carbon transformation, it faces the paradox of a “digital carbon footprint,” where energy-intensive data centers and algorithms may partially offset its carbon reduction benefits, and technology gaps could exacerbate regional inequalities in climate governance. In addition to the global push for carbon neutrality, these findings underscore the need to optimize the application mechanisms of green fintech to maximize its net environmental benefits.