The role of digital finance in reducing agricultural carbon emissions: evidence from China’s provincial panel data

As a vast agricultural country that emits a high level of agricultural carbon, China faces significant pressure to reduce its agricultural emissions. In recent years, digital finance has become a crucial part of China’s financial system and has reshaped China’s mode of green finance. Based on the 2011 to 2020 panel data of 31 provinces in China, this study discusses the effect and mechanisms of digital finance on agricultural carbon emissions. A two-way fixed effect model, threshold effect model, mediating effect model, and moderating effect model have been adopted to investigate the nexus of digital finance and agricultural carbon emissions. The results show that: (1) digital finance can reduce agricultural carbon emissions, and this effect is nonlinear, with two thresholds. (2) A reduction of agricultural carbon emissions through digital finance can be realized via digital finance’s impact on farmers’ entrepreneurship and agricultural technology innovation. (3) Urbanization has a positive moderating effect on digital finance’s agricultural carbon emissions reduction effect. Based on the above conclusions, specific recommendations are proposed with regard to digital finance reducing agricultural carbon emissions.