The nexus between digital finance and household consumption-based carbon emissions: Evidence from China

Abstract

While identifying the sources of carbon emissions has long been a critical focus for researchers and policymakers, there remains a notable gap in understanding micro-level drivers, particularly the relationship between digital finance and household consumption-based carbon emissions. Existing literature has paid limited attention to how digital finance influences this issue. To address this gap, this study investigates the effect of digital finance on household consumption-based carbon emissions and its underlying mechanisms, using Chinese household data. Our analysis reveals that the development of digital finance significantly increases household consumption-based carbon emissions, and this positive effect remains robust even after addressing potential endogeneity concerns. Furthermore, the impact of digital finance on household consumption-based carbon emissions is more prominent in China’s eastern region and rural areas. These findings provide valuable insights for formulating targeted carbon emission reduction policies in the context of digital financial development