Does air pollution inhibit digital finance? Evidence from Chinese prefecture-level cities

Liya Zheng, Tao Cen and Qiaoyun Wu

PLOS ONE, 2023, vol. 18, issue 11, 1-20

Abstract: Air pollution poses significant health and economic challenges globally and specifically affecting China. Although air pollution has been associated with decreased productivity and biases in decision-making, its effect on the development of digital finance has received limited attention in the literature. By employing city-level data from China covering the period from 2013 to 2020, this research examines the impact of air pollution on digital finance. The results show that deteriorating air quality has a negligible impact on digitalization, whereas it has a negative impact on financial inclusion, measured by usage and coverage metrics. The negative impact on financial inclusion is more noticeable in economically weaker and less developed urban areas and low R&D than in developed areas and economically robust cities. The mechanism analysis shows that air pollution reduces human capital quality, resulting in a decline in financial inclusivity. These findings have significant policy implications, underscoring the necessity for approaches that simultaneously tackle air pollution and foster financial innovation.

Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:plo:pone00:0294314

DOI: 10.1371/journal.pone.0294314

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