What role does digital finance play in low-carbon development? Evidence from five major urban agglomerations in China

In the epoch of the digital economy, digital finance (DF) has become an indispensable engine driving the high-quality development of the Chinese economy. The issues of how DF can be used to alleviate environmental pressure and how a long-term governance mechanism for carbon emissions reduction be formed have become particularly important. Based on the panel data of five national urban agglomerations in China from 2011 to 2020, this study utilizes the panel double fixed-effects model and chain mediation model to verify the impact mechanism of DF on carbon emissions efficiency (CEE). Some valuable findings are drawn below. First, the overall CEE of the urban agglomerations has potential for improvement, and the CEE and DF development level of each urban agglomeration have regional heterogeneity. Second, a U-shaped correlation is observed between DF and CEE. Technological innovation and industrial structure upgrading have a chain mediating effect in DF affecting CEE. In addition, the breadth and depth of DF have a notable negative impact on CEE, and the digitalization degree of DF shows a significant positive correlation with CEE. Third, the influencing factors of CEE have regional heterogeneity. Finally, this study provides relevant suggestions based on the empirical conclusions and analysis.