Digital finance, institutional quality, and air pollution: Evidence from China

Bo Li, Xuemei Jia, Zhenya Liu and Fengping Ma

Research in International Business and Finance, 2025, vol. 78, issue C

Abstract: Understanding the relationship between digital finance, institutional quality, and air pollution is crucial to crafting effective environmental policies, particularly in the context of China’s significant strides in the digital era. The study examines how institutional quality moderates the spatial effect of digital finance on air pollution in China. Using data from 30 provinces (2011–2021), it reveals that digital finance growth correlates with improving air quality and becomes more geographically concentrated over time. Institutional quality significantly strengthens digital finance’s positive spatial impact on air quality, especially in well-governed areas, with the indirect impact through institutional quality outweighing the direct one. The findings emphasize the importance of strong institutional quality for environmental management via digital finance.

Keywords: Digital finance; Institutional quality; Air pollution; Spatial durbin model (search for similar items in EconPapers)
JEL-codes: C23 G12 G15 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:78:y:2025:i:c:s0275531925002533

DOI: 10.1016/j.ribaf.2025.102997

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