Empowering green households: How does digital finance influence household carbon footprints?

Abstract

The rapid development of digital finance is profoundly changing business production and household consumption behaviors, but this transformation may exacerbate the growth of household carbon footprints. Exploring the impact of digital finance on household carbon footprints not only helps reveal its potential negative effects but also provides new insights for empowering green household transitions. The study utilizes data from the China Household Finance Survey (CHFS), employing household carbon footprint (HCF) data from 2015, 2017, and 2019. It employs the generalized difference-in-differences (generalized DID) model to systematically assess the causal effects of digital finance on household carbon footprints. The research findings indicate that: (1) digital finance significantly promotes the increase of household carbon footprints; (2) this effect primarily manifests through two pathways: consumption and labor supply; (3) in the consumption pathway, digital finance not only enhances household consumption willingness but also significantly alters the consumption structure; (4) through heterogeneity analysis, the study finds that local governments can mitigate the negative impact of digital finance on household carbon footprints by implementing carbon-inclusive policies and improving human capital levels. In particular, rural households and low-income households show a more significant increase in carbon footprints due to digital finance.; (5) the impact of digital finance on household carbon footprints has a lag effect, with the effect gradually deepening over time. This study provides empirical evidence for balancing economic growth and low-carbon development in developing countries in the digital era and offers policy recommendations for achieving green household transitions.