Essays on the role of rural finance, green finance and digital financial inclusion on agricultural carbon emissions reduction : A thesis submitted in partial fulfilment of the requirements for the Degree of Doctor of Philosophy at Lincoln University

Abstract

Green agricultural development is significant for China against the background of carbon peak and carbon neutrality, and at the same time, it is crucial to secure China's food security. This thesis examines the influence of finance on agricultural carbon emissions, specifically focusing on the significant role of rural finance, green finance and digital financial inclusion. This thesis comprises three essays investigating whether rural finance, green finance and digital financial inclusion help to reduce agricultural carbon emissions in China. The first essay estimates China's agricultural carbon emissions from 2001 to 2020 and analyzes the temporal and spatial characteristics of agricultural carbon emissions, providing a research base for the thesis. Next, the essay examines the impacts of rural finance on agricultural carbon emissions by introducing the rural finance development indicator into the environmental Kuznets Curve Theory. This not only extends the theory but also helps validate the rural environmental Kuznets Curve in China. The findings reveal that the environmental Kuznets Curve hypothesis is invalid in rural China and that rural finance is not conducive to reducing agricultural carbon emissions. The second essay uses a bidirectional-fixed effects regression model, a quantile regression mode, and a difference-in-differences model to investigate the impacts of green finance on agricultural carbon emissions (ACEs). The results reveal that green finance significantly negatively correlates with ACEs in the eastern and central regions but is insignificant for the whole of China. Secondly, there is significant regional heterogeneity in the impact of green finance on ACEs. The impacts of green finance on agricultural carbon emissions also vary across different quantities, showing an asymmetric impact of green finance on ACEs. Thirdly, the Green Finance Reform and Innovation Pilot Zones do not show a direct policy effect on ACEs. The third essay investigates the combined effect of green finance and digital financial inclusion on ACEs using bidirectional fixed-effects regression, moderation mechanism analysis, and Two-Stage Least Squares instrumental methods. The finding reveals that green finance positively impacts ACEs reduction but digital financial inclusion negatively impacts ACEs’ reduction. Moderation mechanism analysis shows that digital financial inclusion has a negative role in moderating the impact of green finance on ACEs, indicating uncoordinated development between green finance and digital financial inclusion in rural China. The results are robust to different methods that address the endogeneity issues. This thesis extends the ACEs theory into the agricultural sector, not only enhancing the scope of the Environmental Kuznets Curve Theory into the agricultural sector but also addressing the omitted variables criticized by scholars by considering financial development's impact on the environment. This thesis also examines the role of green finance in reducing carbon emissions in the agricultural sector, which was overlooked in previous research. Using quantile regression to examine the asymmetric effects of green finance across different quantiles and a difference-in-differences model to examine green policy impacts provides more robust results and critical information for formulating policies. More importantly, this thesis provides a unique perspective to examine the combined effects of green finance and digital financial inclusion, offering pivotal conclusions and policy recommendations.