PLoS ONE (Jan 2023)

Does air pollution inhibit digital finance? Evidence from Chinese prefecture-level cities.

  • Liya Zheng,
  • Tao Cen,
  • Qiaoyun Wu

DOI
https://doi.org/10.1371/journal.pone.0294314
Journal volume & issue
Vol. 18, no. 11
p. e0294314

Abstract

Read online

Air pollution poses significant health and economic challenges globally and specifically affecting China. Although air pollution has been associated with decreased productivity and biases in decision-making, its effect on the development of digital finance has received limited attention in the literature. By employing city-level data from China covering the period from 2013 to 2020, this research examines the impact of air pollution on digital finance. The results show that deteriorating air quality has a negligible impact on digitalization, whereas it has a negative impact on financial inclusion, measured by usage and coverage metrics. The negative impact on financial inclusion is more noticeable in economically weaker and less developed urban areas and low R&D than in developed areas and economically robust cities. The mechanism analysis shows that air pollution reduces human capital quality, resulting in a decline in financial inclusivity. These findings have significant policy implications, underscoring the necessity for approaches that simultaneously tackle air pollution and foster financial innovation.