Does FinTech contribute to green total factor productivity? Evidence from 270 cities in China

The emergence of FinTech has introduced a novel service model within the financial industry, paving the way for an economic transition towards sustainable development. This study examines panel data from 270 cities across China, covering the period from 2010 to 2021, to empirically assess the impact of FinTech on urban green total factor productivity (GTFP) also explores the underlying mechanisms and the spatial diffusion of these effects. The findings indicate that FinTech substantially enhances the GTFP of cities. This conclusion holds true even after conducting robustness tests utilizing instrumental variable methods, alternative variable measurement techniques, and propensity score matching. The analysis of heterogeneity indicates that the impact of FinTech on enhancing urban GTFP is markedly more pronounced in regions with advanced urbanization and a strong governmental focus on environmental issues. Furthermore, the mechanism analysis demonstrates that FinTech substantially promotes urban GTFP by facilitating green innovation and increasing the availability of green credit. The analysis of spatial correlations indicates that FinTech influences the advancement of urban GTFP through a spatial spillover effect. This impact progressively extends from eastern cities to those in the central region. In the context of China's pursuit of sustainable economic development, it is essential to advance FinTech to enhance urban GTFP. This advancement will facilitate a consistent effort towards meeting the country's energy conservation and emissions reduction targets in a timely manner.