The impact of fintech ecosystem on urban carbon emissions: evidence from China

Amid the increasing global demand for carbon reduction, the Fintech Ecosystem (FES) has emerged as a crucial avenue for advancing green economic transformation and reducing urban carbon emissions (UCE), while its actual impact has yet to be thoroughly examined. Therefore, this study investigates how FES development influences UCE, both directly and indirectly, across 282 Chinese cities. This paper develops a comprehensive index system to evaluate FES and employs both fixed-effects panel models and spatial econometric models to examine the impact of FES on UCE across 282 Chinese cities from 2005 to 2020. The results indicate that FES plays a substantial role in decreasing UCE, a finding that withstands various robustness and the endogeneity tests. Mechanism tests reveal that FES can reduce UCE by enhancing green technology innovation, green finance and human capital. Heterogeneity analyses show that FES significantly mitigates UCE across both eastern and western regions and in non-resource-based cities. Furthermore, spatial analysis reveals substantial spillover effects, indicating that FES development in one city positively influences UCE in neighboring regions. The findings highlight the importance for governments to focus on fostering FES development and leveraging its potential to reduce UCE. The outcomes of this research are pivotal for the further cultivation of FES development and the crafting of viable strategies for UCE mitigation.