Urban Economic Efficiency, Environmental Factors, and Digital Finance: Impacts on Sustainable Development in Chinese Cities

Yuling Yuan and Dukangqi Li ()
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Yuling Yuan: School of Economics, Xiamen University, Xiamen 361000, China
Dukangqi Li: School of Economics and Management, Fujian Polytechnic Normal University, Fuqing 350300, China

Sustainability, 2023, vol. 15, issue 18, 1-22

Abstract: This study investigates the potential of digital finance to mitigate the environmental impact of economic development. Utilizing panel data from 290 Chinese cities between 2011 and 2019, we employ a two-way fixed effects model to control for unobservable city characteristics and time-invariant macro factors. Our findings reveal that cities with higher proportions of value-added tax and secondary industries (mainly for manufacturing) tend to experience increased air pollution. Conversely, cities characterized by higher economic efficiency exhibit better air quality, underscoring the significance of prioritizing technology-intensive sectors during economic development. Pollution control technologies, such as centralized wastewater treatment systems and harmless treatment systems for household waste, also play positive roles. Moreover, technological and educational investments correlate with increased urban green coverage and lower air pollution, highlighting the pivotal role of technology development and residents’ literacy in fostering sustainable practices. Although we initially observed a positive association between the index of digital financial technology and air pollution, which could be attributed to the influence of economic growth, our study employs instrumental variable regression to unveil their true correlation. The results suggest the application of digital financial technology may enhance environmental awareness, contributing to the mitigation of air pollution.

Keywords: digital technology; digital inclusive finance; sustainable economy; urban governance (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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