Is digital finance a powerful means for Chinese cities to reduce environmental pollution in the fourth industrial revolution?

Exploring the impact of digital finance on environmental pollution is of great significance for realising regional sustainable development and promoting digital finance strategies. This paper uses the balanced panel data of 274 prefecture-level cities in China collected between 2011 and 2018, empirically studies the impact of digital finance on environmental pollution, and analyses its direct, mediating, nonlinear and heterogeneity effects. The results show that digital finance reduces environmental pollution and the effect gradually increases with time. The sub-indicators of digital finance significantly reduce environmental pollution, among which the usage-depth has the greatest impact on environmental pollution, while digitalisation level has the least. Digital finance reduces environmental pollution through production technology and industrial structure, while pollution control technology does not play an intermediary role. The pollution control effect of digital finance is more prominent in cities with a high level of Internet development and human capital. Furthermore, the inhibitory effect is more significant in western region and medium-small sized cities.