Analysis of the Mediating Effect and Spatial Heterogeneity of Digital Finance Empowering Carbon Emission Reduction

In the context of high-quality economic development in China, how to reduce carbon emissions has become a major issue for the industrial sector. The rapid development of digital finance can effectively solve problems such as financial exclusion, information asymmetry, and efficient allocation of financial resources, thereby providing the possibility of reducing carbon emissions for industrial sectors from the perspectives of products, services, and technology. However, the conclusion on whether digital finance can effectively promote carbon emission reduction is still in a vague stage, and the mechanism of action and transmission path between the two systems have not been uniformly defined. Therefore, it is necessary to study the impact of digital finance on carbon emissions and the transmission channels through which digital finance promotes carbon reduction. This article uses panel data from 31 regions in China, and uses a bidirectional fixed effects model and an intermediary effects model to examine the impact of digital finance on carbon reduction.
It analyzes the ways in which digital finance promotes carbon reduction effects and constructs a spatial heterogeneity analysis model based on differences in economic development levels. Research has found that digital finance can effectively reduce carbon emissions. This result indicates that digital finance, through its strong financial inclusiveness and digital attributes, has expanded corporate financing channels, improved industrial technological innovation, optimized resource allocation, and reflected carbon reduction effects. Of course, the carbon reduction effect of digital financial products and services can also be reflected. This conclusion validates the hypothesis that digital finance can promote carbon reduction effects. Secondly, although digital finance can promote green technology innovation and industrial structure upgrading, industrial structure upgrading is an effective transmission path for digital finance to promote carbon reduction, while green technology innovation is not significant. This indicates that although digital finance can invest high-quality resources into green technological innovation in industries, due to the lag of technological innovation, it is temporarily unable to exert its economies of scale in a short period of time. Further research shows that the impact of digital finance development on carbon emission reduction is diverse depending on the level of regional economic development. Among them, the impact of digital finance development on promoting carbon emission reduction in economically developed areas is smaller than that in underdeveloped areas, while the carbon emission reduction effect in impoverished areas is more significant.
This indicates that in the process of promoting carbon emission effects, underdeveloped regions will have a greater need for the construction and development of digital finance, while economically developed regions need to accelerate the innovation process of digital finance. Of course, with the rapid deepening of digital finance, the increase in total investment of working capital in the market will also bring certain risks. Therefore, enterprises need to prevent the occurrence of such risks. But after adding control variables, the development of digital finance in the western region¡¯s carbon reduction effect changed from negative to positive, but it was not significant at the 10% significance level. This indicates that in economically underdeveloped areas, there may be other factors that have a more significant impact on carbon reduction than digital finance.