How does digital finance affect green technology innovation in the polluting industry? Based on the serial two-mediator model of financing constraints and Research and Development (R&D) investments

Abstract This paper evaluates the importance of combining digital finance with conventional finance and information technology (IT) to bring new opportunities for green technology innovation and transformation within polluting industries. This study builds a theoretical framework “digital finance → financing constraints → R&D investment → green technology innovation” to demonstrate the causal mechanism between digital finance and firms’ green innovation by using the serial two-mediator model. The study shows that digital finance could reduce financial constraints and increase R&D investments, thereby improving enterprises' green technology innovation in the long run. One explanation for such results is the heterogeneity analysis that shows the effects of digital finance on green innovation are more apparent in state-owned enterprises and the regions with lower financial development and with higher financial supervision.