Digital Inclusive Finance, Government Intervention and Urban Green Technology Innovation

Abstract Digital inclusive finance eases credit constraints on innovative small and medium-sized enterprises which contributes to urban green technology innovation in China. Government intervention plays an essential role in the development of digital inclusive finance. Based on the panel data of 247 cities in China from 2011 to 2019, this paper empirically examines the relationship between digital inclusive finance and urban green technology innovation as well as the intrinsic mechanism of government intervention. The findings show that, even after a series of robustness tests, digital inclusive finance can promote the quantity and quality of green technology innovation. In terms of its mechanism, digital inclusive finance can empower green technology innovation by complementing traditional financial development and stimulating consumption, both in terms of supply and demand. At the same time, in the dynamic process of digital financial inclusion from low to high, the development of traditional finance and consumption level on the marginal promotion of green technology innovation continues to strengthen. The nonlinear relationship test reveals that there is a significant double threshold effect on the positive impact of digital inclusive finance on urban green technology innovation with the evolution of government intervention. The innovation incentive effect of digital financial inclusion will be marginal decreasing with the increase of government intervention. Further considering the heterogeneity of urban geographic location and environmental regulation, it is found that digital financial inclusion promotes green technology innovation more in eastern and high-environmental regulation cities. Based on the above research conclusions, this paper argues that while developing digital inclusion finance, government support policies should be adjusted promptly to constantly stimulate the "Metcalfe's law" effect of digital inclusive finance enabling green technology innovation.