## The Role of Digital Inclusive Finance in Green Innovation### AbstractAs environmental issues become more acute, [Authors' name], posit that green innovation has become a critical driver of advancing environmental sustainability and a comprehensive green transition. Digital inclusive finance is recognized as a key enabler in this transition. Drawing on data from Chinese A-share listed companies between 2014 and 2019, this study employs a multidimensional fixed-effect model to systematically investigate the impact and mechanisms of action of digital inclusive finance on corporate green innovation. The study finds that digital inclusive finance significantly spurs green innovation within enterprises. This finding remains robust following a series of robustness checks and the addressing of endogeneity concerns. The facilitative effect is more pronounced in non-state-owned enterprises and areas with stricter environmental regulations. Digital inclusive finance supports green innovation mainly through two pathways: 'funding effects,' related to easing financing constraints and reducing transaction costs, and 'responsibility effects,' pertaining to the enhancement of corporate social responsibility. Additionally, green innovation driven by digital inclusive finance further improves the quality of the ecological environment, leading to increased total factor productivity and overall corporate performance. This paper enriches the externalities research of digital inclusive finance, providing theoretical foundations and practical insights to foster the synergistic development of digital inclusive finance and green innovation.### IntroductionThe continuous growth of finance undoubtedly stimulates economic development. Corporate leaders utilize credit avenues to enhance purchasing power, innovate production organization, and optimize resource distribution, thereby significantly improving resource allocation efficiency. This not only catalyzes the advanced evolution of industrial structures but also robustly propels comprehensive economic prosperity. Inclusive finance, introduced by the United Nations in 2005 and actively supported by the UN and the World Bank, has become a prominent trend in the financial sector. In 2015, China's State Council unveiled the "Development Plan for Inclusive Finance (2016–2020)," clarifying its profound essence. Guided by principles of commercial sustainability and equal opportunities, it emphasizes policy guidance and support, strengthens the financial system framework, refines financial infrastructure, and provides effective financial services to all social strata, ensuring affordability. In this drive, China has notably emerged as a global leader in the rapid development of digital inclusive finance.Digital finance, representing the innovative convergence of the internet and finance, is a cornerstone in China's fintech strategy. Utilizing data analysis and information processing, it significantly enhances the quality and coverage of financial services, greatly increasing accessibility and unlocking economic growth potential, leading to higher income levels [1]. Numerous studies confirm the significant contribution of digital inclusive finance to economic growth [2]. It not only promotes inclusivity, helping to narrow the urban-rural income gap [3], but also benefits a wider population [4], continuously advancing poverty reduction efforts [5]. Additionally, the rise of digital inclusive finance strongly supports corporate growth. It fosters corporate innovation and expansion [6], drastically reduces financing costs for micro-enterprises [7], and accelerates capital structure optimization for SMEs [8]. [Authors' name] [6] demonstrated through their in-depth research that the development of digital inclusive finance lays a solid foundation for corporate innovation, significantly driving its growth. Moreover, the digital nature of digital inclusive finance expands the breadth and depth of financial services. Notably, the rapid rise of digital inclusive finance acts as a powerful catalyst for industrial digitalization, facilitating the integration of digital technologies with the real economy, heralding transformative impacts on economic development and upgrades [9].#### Green Innovation and the Role of Digital Inclusive FinanceIn response to global calls for climate action, China, as a major nation, outlined its “dual carbon” blueprint at the 75th United Nations General Assembly, aiming for carbon dioxide emissions to peak by 2030. Since then, the Chinese economy has been transitioning from rapid growth to high-quality development, with “Building a Beautiful China” as a significant strategic objective. In this transition, integrating green development with economic growth becomes pivotal, potentially resolving the dichotomy between economic progress and environmental protection [10]. Green innovation serves as a powerful means for businesses to reap economic benefits and reduce ecological impact throughout a product's lifecycle, achieving positive environmental outcomes [11]. It becomes a central force propelling high-quality societal development. Hence, exploring how digital inclusive finance influences green innovation holds profound implications, aiding in ecosystem restoration and advancing carbon peaking and neutrality goals.As the concept of sustainable development deepens, it increasingly integrates with modern finance in multiple dimensions. In this context, finance, as a core element of green technology innovation, becomes crucial in directly affecting the effectiveness of corporate green technology innovation [12]. Currently, many scholars have conducted in-depth research on the impact of digital inclusive finance on green innovation. Several studies have found that the development of digital inclusive finance can significantly promote enterprises' green technological innovation [13–15] and the output of green patents [16]. In this process, alleviating financial constraints on enterprises is a key way for digital inclusive finance to exert its effect [13, 17]. Additionally, digital inclusive finance can stimulate green technology innovation through mechanisms such as encouraging green consumption [17] and optimizing industrial structure [15]. Beyond the corporate level, digital inclusive finance plays an important role in regional green development. Research shows that digital inclusive finance helps improve the green total factor productivity of the agricultural sector [18, 19], and also positively affects regional inclusive green growth [20] and urban green technological innovation [21]. Its mechanisms of influence include improving green technological innovation [20], optimizing energy structure [22], and more. Notably, the effect of digital inclusive finance on green innovation and the environment exhibits certain heterogeneity. Some studies have found that the promoting effect of digital inclusive finance on green innovation is more significant in eastern regions [21], high-income areas, and areas where agriculture is relatively concentrated [23]. Furthermore, the impact of different dimensions of digital inclusive finance (such as coverage breadth, usage depth, etc.) on green innovation also varies [14, 24].### Theoretical FrameworkAgainst the backdrop of China's steady and rapid economic growth, the world has witnessed the remarkable “China Miracle.” With the meteoric rise of the digital economy, digital inclusive finance has emerged as a significant opportunity for financial technologization. Today, after a series of evolutions and advancements, China's digital inclusive finance stands at the forefront globally, setting a benchmark for the world. Its rapid development can be attributed to two primary factors: first, the supply shortage in the traditional financial sector, and second, lax regulatory policies, which have created a conducive environment for the growth of digital inclusive finance [25].#### Digital Inclusive Finance, Financing Constraints, and Funding EffectsFor the smooth advancement of green innovation activities, adequate funding for corporate R&D is indispensable. Solutions in this regard primarily involve two dimensions: alleviating financing constraints for businesses and reducing operational costs. With the aid of advanced digital technologies like big data, cloud computing, and mobile internet, China's inclusive finance sector continues to make innovative strides, significantly reducing operational costs for financial institutions [7]. Import