Mechanism and effects of digital finance on carbon emissions.

In recent years, China' s digital finance has developed rapidly, and its application scope continues to expand, which has a profound impact on people' s production and lifestyle and may affect carbon emissions. On the basis of a literature review, this paper firstly summarized the possible ways of impact of digital finance on carbon emissions and then illustrated the economic principles and impact mechanism of how digital finance affected carbon emissions by introducing digital finance and energy consumption into the production function and introducing the stock of carbon dioxide into the consumer utility function to improve Romer's endogenous economic growth model. The results of the theoretical analysis showed that the development of digital finance would affect carbon emissions by influencing the consumption concepts and behavior of residents, the mode of production activities, and the innovation efficiency of enterprises. Besides, the relationship between digital finance and carbon emissions represented an inverted U-shape, and the digital financial capacity required by the turning point of carbon emissions mainly depended on the existing energy consumption and technological innovation. Then, based on China' s provincial data, this paper analyzed the above inverted U-shape relationship empirically and tested the corresponding intermediary mechanism. The results showed that: (1) The impact of digital finance on carbon emissions could be decomposed into the effects of increasing production and those of saving energy. (2) Under the two comprehensive effects, carbon emissions increased first and then decreased with the development of digital finance, and this inverted U-shape relationship passed the endo-geneity and robustness tests. (3) There were significant structural differences in the impact of digital finance on carbon emissions in terms of breadth, depth, and degree of digitalization. (4) In addition, the results of the impact mechanism analysis also showed that the development of digital finance alleviated the pressure on the financing demand of enterprises, and the production scale under the traditional production mode was thus expanded and the carbon emissions increased, meaning that the impact brought by the development of digital finance was more reflected in the increase of carbon emissions with the expansion of output (yield increasing effect). However, as the development of digital finance deepened and digitalization played a cumulative role in the later stage, the innovation and emission reduction effects brought by the promotion of enterprise R&D and energy-saving technology patents significantly increased, which eventually led to the reduction of carbon emissions (energy saving effect) by reducing the carbon intensity. Based on this, the development of digital finance in China should shift from a mode emphasizing quantity to one emphasizing quality as soon as possible to provide precise support for the country' s low-carbon and energy-saving transformation, digital upgrading of enterprises, optimization of energy industry structures, new energy development and utilization, and continuous innovation of digital carbon financial products. [ABSTRACT FROM AUTHOR]