Impact of Inclusive Finance on Digital Transformation in Chinese Pollution-Intensive Enterprises

Abstract

This study examines the association between inclusive finance and digital transformation among Chinese pollution-intensive enterprises, whose digital upgrading remains constrained despite extensive policy support for the digital economy. The analysis draws on a panel of 1,251 Chinese A-share-listed enterprises and 10,451 firm-year observations from 2011 to 2023. Panel regression models are estimated, with two-step system GMM serving as the primary estimator to account for persistence and potential endogeneity. Inclusive finance is positively associated with enterprise digital transformation. Further estimates indicate positive associations with artificial intelligence, big data, cloud computing, and digital technology applications, whereas the estimate for blockchain technology is statistically insignificant. Both the coverage breadth and use depth of inclusive finance are positively related to digital transformation. The main result remains robust across industrial groups and geographic regions. Heterogeneity estimates further show that the positive association is stronger among state-owned and high-tech pollution-intensive enterprises. These findings support financial policies that expand both the accessibility and substantive use of inclusive financial services while tailoring digital transformation support to firms’ ownership structures and technological capabilities.