The nonlinear dynamic effects of fintech on carbon emissions: Evidence from Chinese cities

The rapid evolution of financial technology (fintech) is reshaping the financial ecosystem, yet its environmental implications remain understudied. Leveraging a novel dataset spanning 280 Chinese cities, this study examines the non-linear relationship between fintech maturity and carbon emissions, with a focus on the moderating role of banking competition. Using web crawlers and text recognition techniques to quantify fintech levels through Baidu News keyword frequency, we demonstrate that fintech development follows an inverted U-shaped trajectory in relation to carbon emissions: early-stage expansion increases emissions, whereas post-2015 advancements drive mitigation. Mechanism analysis reveals that green innovation and manufacturing servitization are critical pathways. Heterogeneity analysis further demonstrates that the inverted U-shaped effect of fintech on carbon emissions is predominantly observed in non-resource-dependent cities, while in resource-dependent cities, carbon emissions consistently rise with fintech development. Furthermore, intensified banking competition amplifies fintech's emission-reduction potential, particularly in non-resource-dependent regions. These findings provide actionable insights for policymakers to align fintech-driven financial reforms with sustainable development goals.