Digital finance policy and the challenge of air pollution in China

This study investigates the influence of digital finance tools on air quality in China from 1990 to 2020 using the cross-sectional augmented autoregressive distributed lag approach. The findings show that digital finance, especially internet banking, significantly reduces air pollution levels by lowering vehicular emissions and improving financial operational efficiency. ATM banking also shows a negative, albeit smaller, correlation with air pollution. Conversely, coal consumption, urban population growth, and inflation are positively associated with pollution, highlighting the need for sustainable urban planning and energy transition policies. The study suggests leveraging digital finance, broadening digitalization across sectors, and using AI and big data for targeted interventions to combat air pollution in China.

Linyue Li, Guoqiang Li, Fuchang Li