sustainability
Article
Impact of Digital Finance on Green Technology Innovation:
The Mediating Effect of Financial Constraints
Decai Tang 1 , Wenya Chen 1 , Qian Zhang 2, *
Citation: Tang, D.; Chen, W.; Zhang,
Q.; Zhang, J. Impact of Digital
Finance on Green Technology
Innovation: The Mediating Effect of
Financial Constraints. Sustainability
2023, 15, 3393. https://doi.org/
10.3390/su15043393
Academic Editor: Mete Feridun
Received: 6 January 2023
Revised: 7 February 2023
Accepted: 10 February 2023
Published: 13 February 2023
Copyright: © 2023 by the authors.
Licensee MDPI, Basel, Switzerland.
This article is an open access article
distributed under the terms and
conditions of the Creative Commons
Attribution (CC BY) license (https://
creativecommons.org/licenses/by/
4.0/).
Sustainability 2023, 15, 3393. https://doi.org/10.3390/su15043393
and Jianqun Zhang 3
1 School of Management Science and Engineering, Nanjing University of Information Science & Technology,
Nanjing 210044, China
2 Business School, Nanjing Xiaozhuang University, Nanjing 211171, China
3 School of Languages and Communication Studies, Bejing Jiaotong University, Beijing 100044, China
* Correspondence: zhangqian@njxzc.edu.cn
Abstract: Green technology innovation is crucial for achieving sustainable development. This paper
establishes fixed effect and mediation effect models to study how digital finance influences corporate
green technology innovation and the moderating role of financial constraints using the data of Chinese
A-share public businesses from 2011 to 2020. The results show that, first, green technology innovation
is facilitated by digital finance, and both the coverage breadth and use depth play important roles.
Second, digital finance encourages business innovation in green technology by alleviating financial
constraints. Third, in state-owned businesses and businesses located in the eastern regions, digital
finance has a more visible driving impact on green technology innovation. The aforementioned
findings offer insightful research to encourage the balanced growth of digital finance and better
enable corporate green technology innovation.
Keywords: digital finance; green technology innovation; financial constraints; China A-share
1. Introduction
With the degradation in the global environment, the new round of technological
competition and the global industrial revolution pays more attention to green technology
innovation. As a symbol of productivity, sustainability, and a reduction in adverse effects
on the production process [1], green technology innovation includes the innovation of new
products, management styles, and services [2], and it is an important driving factor in
attaining sustainable development [3]. In 2020, 40% of the cities in China did not satisfy the
ambient air quality standard, and about one-third of the cities did not meet the national
level II criteria for PM2.5 concentration. The high-speed economic development mode at
the cost of environmental pollution is difficult to sustain. Therefore, China urgently has
to rely on green technology to prevent environmental pollution and achieve sustainable
growth. Green technology innovation considers corporate interests and environmental
factors and is the fundamental way to balance economic development and the ecological
environment.
In terms of supporting green technology innovation of enterprises, traditional finan-
cial institutions have the problem of mismatching financial resources and low financing
efficiency [4], which makes it difficult to meet corporate capital needs. In comparison,
digital finance connects information technology with traditional finance, which comple-
ments the flaws of traditional finance and gives greater vitality to technological innovation.
On the one hand, digital finance can lower the cost of credit assessment, speed up loan
procedures, and open up new financing avenues for corporate innovation [4]. It enlarges
the coverage of financial services [5], lowers the financial services threshold, and is helpful
in enabling corporate technology innovation [6]. Green technology innovation, on the other
hand, can give businesses new market opportunities, boost their competitiveness, and help
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Sustainability 2023, 15, 3393 2 of 16

realize their sustainability development [7]. Studying how digital finance promotes green
technology innovation is of great significance.
Based on the listed companies’ data from 2011 to 2020, this paper researches the
connection between digital finance and green technology innovation. First, this paper
studies how digital finance and its three dimensions influence green technology innovation.
Secondly, this paper studies the mechanism of green technology innovation driven by
digital finance. Finally, heterogeneity analysis is used to deeply research the influential
mechanism of digital finance on green technology innovation.
The remainder of this paper is structured as follows: Section 2 is a review of the
literature. Section 3 is the theoretical analysis and hypothesis. Section 4 introduces the
study design. Section 5 analyzes the empirical findings. Section 6 provides conclusions and
policy implications.

2. Literature Review
2.1. Green Technology Innovation
Green technology innovation, as introduced by Brawn and Wield, is described as pro-
duction and manufacturing methods that can lessen the use of resources such as energy and
raw materials and environmental pollution [8]. The implementation of green technology
innovation fosters the conversion of corporate green knowledge into environmental per-
formance [9]. It helps reduce environmental deterioration and raise productivity [10]. The
existing literature on green technology innovation is mostly combined with environmental
regulation. Porter concluded that appropriate environmental regulations would help pro-
mote green technology innovation [11]. Based upon Porter’s argument, other academics
have confirmed that green technology innovation can be encouraged by environmental
regulation [12–15]. However, Lin et al. [16] concluded that environmental regulation hin-
dered green technology innovation. They stated that regulations place higher compliance
costs on businesses that pollute extensively. According to Behera et al., there’s a U-shaped
changing trend between green technology innovation and environmental regulation [12].
There are also many scholars who study green technology innovation from different
perspectives. Na et al. [17] found that corporate green technology innovation could be
enhanced by green finance. Additionally, economic growth is crucial for fostering the
development of green innovation [18]. In addition, government subsidies considerably
increase manufacturing companies’ incentives to pursue green innovation [19]. Pedro et al.
demonstrated that enterprises could promote green innovation activities by strengthening
R&D investment intensity [20]. Zhao et al. investigated the link between board size and
green innovation. The findings demonstrate that more board members can support the
implementation of a green innovation strategy and expand the openness and breadth of
innovation [21]. Additionally, the extended producer responsibility system has significantly
promoted green technology innovation [22]. Furthermore, green technology innovation
aids in lowering carbon dioxide emissions [23–25].

2.2. Digital Finance

Digital finance is emerging as the times demand against the backdrop of informa-
tion technology and finance integration [26]. The existing literature about digital finance
is very rich. On the macro level, by advancing and promoting the industrial structure,
digital finance raises the quality of economic growth [27]. Additionally, digital finance
positively moderates the influence of environmental regulation on high-quality economic
development [28]. The growth of digital finance can encourage residents’ spending and
consumption upgradation [29]. Additionally, by increasing online shopping and reducing
income inequality, digital finance can also lower consumption inequality among farm-
ers [30]. Digital finance can also support the development of inclusive finance [31]. On the
micro level, by reducing the degree of information asymmetry, digital finance can encour-
age the investment behavior of micro and small enterprises (MSEs) [32]. Digital finance
also has a positive impact on the corporate environment, society, and governance [33].
Sustainability 2023, 15, 3393 3 of 16

According to Xin et al., digital finance enhances the social responsibility performance of
industries that produce a lot of pollution [34]. Abbasi et al. proposed that digital finance
could enhance corporate performance and maintain competitiveness [35].

2.3. Green Technology Innovation and Digital Finance

Several academics concentrate on the connection between green technology innovation
and digital finance. Some people concluded that green technology innovation could
be promoted by digital finance [36–38]. The benefits of “cheap cost, quick speed, and
extensive coverage” that are offered by digital finance can lower the entry barrier for
financial services. Through well-informed decisions, it can lessen information asymmetry
and increase the financial market’s efficiency [39]. Feng et al. discovered that digital
finance could ease financing limitations, promote manufacturing expansion, and enhance
the regional capacity for green innovation [38]. Han et al. [40] discovered that digital
finance displays the “network effect” and “inclusive effect” when driving green innovation.
Digitalization encourages gathering, storing, transmitting, and identifying information,
improves a businesses’ capacity to analyze huge amounts of data, and raises risk-bearing
by improving financing availability [41]. Digital finance has greatly decreased search and
risk identification costs released a lot of new business space, and provided opportunities
for corporate technology innovation [42].
Based on the sorting of the existing literature, there is some research regarding the
influence of digital finance on green technology innovation. However, there are few
articles to study on the different dimensions of digital financing. So, this paper examines
the impact of digital finance and its three dimensions on green technology innovation,
including the breadth of coverage, depth of use, and degree of digitization, which is a more
thorough analysis. This paper also explores the intermediary role of financial constraints
and examines the region and enterprise nature heterogeneity. This will offer theoretical
support for encouraging the growth of green technology innovation.

3. Theoretical Analysis and Hypothesis

3.1. Digital Finance and Green Technology Innovation
Because green technology innovation has a high degree of complexity and novelty [43],
enterprises must invest a large sum of money. Digital financing makes up for the flaws of
traditional financing [44]. It uses the Internet to break the space limitation and includes
the long-tailed groups into the service scope, which advances the growth of inclusive
finance [45] and improves the accessibility and convenience of financial services [44].
Digital finance broadens financing avenues to meet the diversified financing requirements
of businesses [26], which supports businesses in carrying out green technology innovation.
Digital finance also gives financial institutions access to more credit data about lenders,
which helps financial institutions reduce information asymmetry [46] and offers to finance
more corporate innovation projects. All of this boosts the impetus of green technology
innovation. Additionally, the financial market is creatively altered by digital finance, which
helps improve the expected return on technology innovation [47] and raises entrepreneurs’
passion for innovation.
The following hypothesis is put forth based on the analysis mentioned above.

Hypothesis 1. Digital finance can advance green technology innovation.

3.2. The Mediating Effect of Financial Constraints

The pecking order of financing theory put forward by Myers and Majluf shows that
corporate financing follows the order of internal surplus, debt financing, and equity financ-
ing when there is a transaction cost [48]. Smaller enterprises need external financing since
their internal earnings are insufficient. However, internal and external financing methods
are not completely replaced [49] because of information asymmetry and agency costs in
the real environment [50], which leads to the problem of financial constraints. Scholars
Sustainability 2023, 15, 3393 4 of 16

also proposed that innovative enterprises confront stronger financial constraints [49]. Ad-
ditionally, a company’s R&D intensity and innovative power are decreased by financial
constraints [51,52]. Digital technology can assist with digital financing and alleviate the
information asymmetry problem [46]. Based on the description, judgment, and prediction
of massive data, big data can accurately portray users and judge customer reputation and
risk-bearing capacity [53], which helps reduce transaction costs. Additionally, the internet
of things also aids financial institutions in knowing the corporate circumstances better and
enhancing their capacity for risk management. Digital financing can effectively alleviate
financial constraints, then encourage corporate innovation in green technology.
The following hypothesis is put forth based on the analysis mentioned above.

Hypothesis 2. Digital financing boosts corporate green technology innovation by alleviat-

ing financial constraints.

4. Study Design
4.1. Variable Selection
4.1.1. Explained Variable
Green technology innovation (GTI): corporate green patent applications are chosen to
gauge green technology innovation based on prior studies [22,54].

4.1.2. Explanatory Variable

Digital finance (DF): The Peking University digital financial inclusion index is a
popular choice for measuring digital finance in current research [37,38,40]. The index
systematically depicts the development level of banking, payment, investment, insurance,
and other industries based on comprehensively summarizing the connotation and char-
acteristics of digital finance. The index includes three dimensions, including 33 specific
indicators in total. It can better measure the digital finance level of different provinces.
Therefore, this index is used to measure digital finance. This paper performs a logarithm of
treatment on the data.

4.1.3. Control Variables

Reviewing the related literature [55,56], corporate size, leverage, growth, ROA, cash
flow, the proportion of independent directors, and the proportion of the first shareholder
are selected as control variables. Table 1 is the variable interpretation.

4.1.4. Data Resource and Descriptive Statistics

The research sampled listed companies’ annual data from 2011 to 2020. The following
processing was made: (1) exclude the special treatment companies, (2) exclude financial and
real estate industries, (3) delete the sample with missing data of variables. The Winsorize
method is used to avoid the impact of extreme values. After sorting out, 11,550 annual
observation samples were finally obtained. The green patent application data were from
the Chinese Research Data Services Platform. Corporate financial data came from CSMAR.
The digital finance index was from the Peking University Digital Finance Research Center.

4.2. Model Setting

The following model is used in this essay to verify Hypothesis 1:

GFIi,t = α0 + α1 DFi,t + ∑ α2 CVi,t + ∑ industry + ∑ year + ε i,t (1)

where t and i represent the year and enterprise, respectively. Green technology innovation
is represented by GFI. Digital finance is marked as DF. The random error term is ε i,t . CV
are the control variables. For empirical analysis, this study used a fixed effect model with
controlling industry and year effects.
Sustainability 2023, 15, 3393 5 of 16

To study influential mechanisms, mediation effect models were established as follows

to verify hypothesis 2 [57]:

GFIi,t = β 0 + β 1 DFi,t + ∑ β 2 CVi,t + ∑ industry + ∑ year + ε 1 (2)

Mi,t = γ0 + γ1 DFi,t + ∑ γ2 CVi,t + ∑ industry + ∑ year + ε 2 (3)

GFIi,t = λ0 + λ1 Mi,t + λ2 DFi,t + ∑ λ3 CVi,t + ∑ industry + ∑ year + ε 3 (4)
In Equations (3) and (4), M represents the mediator variables, that is, financial constraints.

Table 1. Variables description.

Type Name of Variable Symbol Definition

Explained Green technology innovation GTI Number of green patent applications of listed companies
variable
Digital finance index DF
Explanatory breadth of coverage DFc
Peking University digital inclusive financial index
variables Depth of use DFu
Degree of digitization DFd
Corporate size size Natural logarithm of total assets
Leverage lev Total debts/Total assets
operating income of current year−operating income of last year
Growth Growth operating income of last year
Control Return on total assets ROA Net profit/Total assets
variables cash flow CF Cash flow/Total assets
Proportion of independent
Indd The number of independent directors/the total number of directors
directors
Proportion of the first
Tops Proportion of the first shareholder
shareholder

5. Empirical Analysis
5.1. Descriptive Statistics
Table 2 presents the descriptive statistics. The standard deviation and mean of green
technology innovation are 1.32 and 1.38, respectively, which implies that there are huge
individual differences in green technology innovation. The average number of digital
finances is 5.309, which means that the digital financial development level is high. The
maximum and minimum values are 6.068 and 2.786, respectively, which means the unbal-
anced regional development of digital finance. Table 3 exhibits the correlation coefficients
between variables. In addition, all of the variables’ variance inflation factors are under 10,
demonstrating that the multicollinearity problem does not exist.

Table 2. Descriptive statistics.

Variables obs Mean Median Std.Dev. Min Max

GTI 11,550 1.380 1.099 1.320 0.000 7.319
DF 11,550 5.309 5.485 0.634 2.786 6.068
DF-coverage 11,550 5.195 5.418 0.730 0.673 5.984
DF-use 11,550 5.340 5.456 0.588 1.911 6.192
DF-digitization 11,550 5.477 5.777 0.771 2.026 6.136
Size 11,550 22.595 22.447 1.409 16.161 28.636
Lev 11,550 0.465 0.461 0.388 −0.195 28.548
Growth 11,550 0.176 0.104 0.468 −0.608 3.317
ROA 11,550 0.035 0.033 0.055 −0.225 0.185
CF 11,550 0.044 0.044 0.122 −10.216 0.600
Indd 11,550 0.374 0.333 0.058 0.200 0.800
Tops 11,550 34.543 32.030 15.494 2.870 89.990
Sustainability 2023, 15, 3393 6 of 16

Table 3. Correlation coefficient.

GTI DF DFc DFu DFd Size Lev Growth ROA CF Indd Tops
GTI 1.000
DF 0.279 *** 1.000
DFc 0.269 *** 0.983 *** 1.000
DFu 0.282 *** 0.971 *** 0.942 *** 1.000
DFd 0.234 *** 0.875 *** 0.799 *** 0.816 *** 1.000
size 0.451 *** 0.246 *** 0.236 *** 0.227 *** 0.228 *** 1.000
lev 0.096 *** 0.014 0.010 0.008 0.030 *** 0.190 *** 1.000
growth 0.001 −0.008 −0.010 −0.010 −0.002 −0.036 *** 0.016 ** 1.000
ROA 0.008 −0.027 *** −0.023 ** −0.025 *** −0.030 *** 0.038 *** −0.672 *** 0.001 1.000
CF 0.020 ** 0.058 *** 0.055 *** 0.054 *** 0.059 *** 0.130 *** −0.062 *** −0.010 0.083 *** 1.000
Indd 0.069 *** 0.040 *** 0.037 *** 0.036 *** 0.040 *** 0.083 *** 0.022 ** −0.010 −0.010 −0.022 ** 1.000
Tops 0.019 * −0.096 ** −0.086 *** −0.102 *** −0.101 *** 0.271 *** 0.040 *** 0.007 0.025 *** 0.079 *** 0.032 *** 1.000
Notes: *, **, and *** represent significance at levels of 10%, 5%, and 1%, respectively, and t-statistics are in paren-
theses.

5.2. Regression Analysis

From the results in columns 1 and 2 of Table 4, the coefficients of DF were significantly
positive before and after adding the control variables. This implies that green technology
innovation could be promoted by digital finance. Hypothesis 1 is verified.

Table 4. Regression results of the impact of digital finance on green technology innovation.

GFI
Variables
(1) (2) (3) (4) (5)
DF 0.152 *** 0.095 ***
(3.69) (2.64)
DFc 0.054 **
(2.20)
DFu 0.159 ***
(4.46)
DFd 0.014
(0.36)
Size 0.488 *** 0.488 *** 0.488 *** 0.489 ***
(57.16) (57.17) (57.20) (57.26)
Lev 0.099 *** 0.098 *** 0.102 *** 0.095 ***
(2.79) (2.77) (2.88) (2.68)
Growth −0.001 −0.001 −0.001 −0.001 *
(−1.62) (−1.61) (−1.60) (−1.65)
ROA 0.068 0.067 0.071 0.065
(1.56) (1.55) (1.62) (1.49)
CF −0.086 −0.086 −0.091 −0.085
(−1.05) (−1.04) (−1.10) (−1.03)
Indd −0.064 −0.066 −0.055 −0.072
(−0.38) (−0.39) (−0.33) (−0.42)
Tops −0.002 ** −0.002 ** −0.002 ** −0.001 **
(−2.24) (−2.23) (−2.27) (−2.15)
Constant 0.932 ** −10.102 *** −9.933 *** −10.389 *** −9.774 ***
(2.29) (−25.06) (−25.56) (−25.65) (−24.43)
Industry Yes Yes Yes Yes Yes
Year Yes Yes Yes Yes Yes
N 11,550 11,550 11,550 11,550 11,550
adj.R2 0.217 0.408 0.408 0.409 0.408
Notes: *, **, and *** represent significance at the levels of 10%, 5%, and 1%, respectively, and t-statistics are
in parentheses.

This paper further selects three dimensions of the digital financial index for empirical
analysis, including the digital financial breadth of coverage (DFc), depth of use (DFu), and
degree of digitization (DFd). The breadth of coverage mainly means account coverage,
Sustainability 2023, 15, 3393 7 of 16

depth of use includes indicators such as the actual total usage and activity situation, and
digital degree refers to the degree of mobility, facilitation, and credit. As shown in columns
(3), (4), and (5), three variables are positively connected with green technology innovation.
The coefficients of DFc and DFu are at a significant level. Based on Internet technology,
digital finance can serve more enterprises across time and space constraints. In addition,
digital financing can provide services such as payment, insurance, and credit. A deeper
exploration based on diversified business formats will help to provide a sustainable impetus
for enterprise innovation [42]. Therefore, digital finance should not only focus on coverage
but also pay attention to the in-depth upgrading of different service formats. This helps
digital finance to provide a strong and sustainable impetus for enterprises to conduct green
technology innovation.

5.3. Mediation Effect Analysis

To verify hypothesis 2, this paper tested the mediation effect and took financial
constraints as intermediary variables. Hadlock and Pierce [58] established a model to
analyze the KZ index and WW index, concluded that enterprise size and age are good
indicators of financial constraints, and proposed the SA index as a new metric to gauge
financial constraints. Table 5 shows that the impact coefficient of digital financing on
financial constraints is significantly negative. The effect coefficient of digital financing on
green technology innovation decreases after adding intermediary variables, indicating
that there is an intermediary effect. By lowering information asymmetry and agency
costs [34], digital financing can foster innovation in green technology by eliminating
financial constraints. Hypothesis 2 is confirmed.

Table 5. Mediation effect analysis-financial constraints.

GTI FC GFI
Variables
(1) (2) (3)
DF 0.095 *** −0.045 *** 0.073 **
(2.64) (−5.19) (2.05)
FC −0.477 ***
(−12.50)
Size 0.488 *** −0.005 ** 0.485 ***
(57.16) (−2.40) (57.25)
Lev 0.099 *** 0.104 *** 0.148 ***
(2.79) (12.05) (4.18)
Growth −0.001 −0.00003 −0.001 *
(−1.62) (−0.22) (−1.66)
ROA 0.068 0.103 *** 0.117 ***
(1.56) (9.74) (2.70)
CF −0.086 0.076 *** −0.050
(−1.05) (3.82) (−0.61)
Indd −0.064 −0.306 *** −0.210
(−0.38) (−7.42) (−1.24)
Tops −0.002 ** −0.001 *** −0.002 ***
(−2.24) (−7.95) (−3.18)
Constant −10.102 *** 3.532 *** −8.416 ***
(−25.06) (36.09) (−19.92)
Industry Yes Yes Yes
Year Yes Yes Yes
N 11,550 11,550 11,550
adj.R2 0.408 0.289 0.416
Notes: *, **, and *** represent significance at the levels of 10%, 5%, and 1%, respectively, and t-statistics are
in parentheses.
Sustainability 2023, 15, 3393 8 of 16

5.4. Robustness Test

5.4.1. Tobit Model
Since the quantity of green patent applications of some businesses is 0, the Tobit
model can be used to test the data analysis of this zero-value accumulation. Table 6 shows
the empirical results. The coefficients of DF, DFc, and DFu are positive and statistically
significant. This shows that the results are still valid after replacing the model.

Table 6. Tobit model results.

GTI
Variables
(1) (2) (3) (4)
DF 0.108 **
(2.13)
DFc 0.065 *
(1.86)
Dfu 0.199 ***
(3.93)
DFd 0.007
(0.14)
Size 0.640 *** 0.640 *** 0.640 *** 0.641 ***
(51.29) (51.29) (51.38) (51.35)
Lev 0.052 0.051 0.060 0.045
(0.84) (0.83) (0.98) (0.72)
Growth −0.001 −0.001 −0.001 −0.001
(−1.33) (−1.32) (−1.32) (−1.35)
ROA 0.168 0.168 ** 0.165 ** 0.171
(1.44) (1.44) (1.41) (1.47)
CF −0.0003 −0.001 −0.008 −0.002
(0.00) (0.00) (−0.05) (−0.01)
Indd −0.409 * −0.410 * −0.399 * −0.415 *
(−1.73) (−1.73) (−1.69) (−1.75)
Tops −0.002 * −0.002 * −0.002 * −0.002 *
(−1.83) (−1.82) (−1.86) (−1.76)
Constant −13.185 *** −12.933 *** −12.933 *** −12.610 ***
(−30.72) (−34.71) (−34.71) (−27.84)
Industry Yes Yes Yes Yes
Year Yes Yes Yes Yes
N 11,550 11,550 11,550 11,550
Pseudo R2 0.1516 0.1516 0.1516 0.1515
Notes: *, **, and *** represent significance at the levels of 10%, 5%, and 1%, respectively, and t-statistics are
in parentheses.

5.4.2. Replacing Explained Variable

This paper replaces the metrics of green technology innovation and uses the number
of green patent authorizations. Table 7 shows the empirical results. Columns 1–4 show that
the result of green technology innovation could be encouraged by digital finance and is
robust. Columns 5 and 6 prove that there is an intermediary effect.

5.4.3. Endogenetic Test

This paper used the methods of model replacement and variable replacement for
robustness testing. Considering endogenous problems such as missing variables, this paper
selected internet penetration as the instrumental variable when consulting the method of
Xie et al. [59]. The data come from the China Internet Information Center. Regional internet
penetration expansions provide the foundations for digital finance. The two are closely
linked. In comparison, there is no direct link between green technology innovation and
regional internet penetration. In theory, this instrumental variable is reasonable. The 2SLS
method is used to carry out the endogenous test. Table 8 shows that the digital financial
coefficient is also significantly positive, which confirms the robustness of the results.
Sustainability 2023, 15, 3393 9 of 16

Table 7. Empirical results after changing explained variables.

GTI GTI GTI GTI FC GTI

Variables
(1) (2) (3) (4) (5) (6)
DF 0.071 ** −0.047 *** 0.046
(2.07) (−5.20) (1.37)
DFc 0.048 **
(2.09)
DFu 0.133 ***
(3.93)
DFd −0.073 **
(−2.08)
FC −0.515 ***
(−14.08)
Size 0.413 *** 0.413 *** 0.413 *** 0.413 *** −0.013 *** 0.406 ***
(49.68) (49.68) (49.71) (49.76) (−5.87) (49.26)
Lev 0.144 *** 0.144 *** 0.147 *** 0.143 *** 0.128 *** 0.210 ***
(3.68) (3.68) (3.78) (3.67) (12.25) (5.38)
Growth −0.001 −0.001 −0.001 −0.001 −0.00002 −0.001
(−1.60) (−1.59) (−1.61) (−1.58) (−0.17) (−1.63)
ROA 0.088 * 0.085 * 0.088 ** 0.084 * 0.129 *** 0.150 ***
(1.92) (1.92) (2.00) (1.92) (10.81) (3.42)
CF −0.068 −0.068 −0.072 −0.069 0.073 *** −0.031
(−0.89) (−0.89) (−0.95) (−0.90) (3.56) (−0.40)
Indd −0.073 0.073 0.08 0.07 −0.312 *** −0.088
(0.45) (0.45) (0.49) (0.43) (−7.20) (−0.55)
Tops −0.001 ** −0.001 −0.001 −0.001 −0.001 *** −0.001 *
(−0.97) (−0.97) (−0.99) (−0.95) (−6.18) (−1.83)
Constant −9.010 *** −8.870 *** −9.354 *** −8.192 *** 4.764 *** −6.557 ***
(−22.05) (−23.17) (−22.89) (−19.43) (43.70) (−14.88)
Industry Yes Yes Yes Yes Yes Yes
Year Yes Yes Yes Yes Yes Yes
N 10,395 10,395 10,395 10,395 10,395 10,395
R2 0.3752 0.3752 0.3759 0.3752 0.2659 0.3869
Notes: *, ** and *** represent significant at the significance levels of 10%, 5% and 1%, respectively, and t-statistics
are in parentheses.

5.5. Heterogeneity Analysis

5.5.1. Regional Heterogeneity
There are 34 provincial administrative regions in China, and regional economic de-
velopment levels vary greatly. To further analyze if there are regional disparities, China is
classified into three parts, namely, West China, Central China, and East China. As shown
in Table 9, three digital financial coefficients were positive and at a significant level. By
contrast, in the eastern region, digital finance had a more obvious promotion effect on cor-
porate green technology innovation. East China has the advantages of a dense population,
a developed economy, and a high digital finance development level. This makes enter-
prises in the eastern region have a stronger capital gathering and technological innovation
capabilities. The smooth flow of information makes them face lower financial constraints.
Therefore, digital financing can more effectively encourage green technology innovation
among eastern region businesses.
Sustainability 2023, 15, 3393 10 of 16

Table 8. Endogenetic test.

GTI GTI
Variables
Patent Application Patent Authorizations
DF 0.503 *** 0.439 ***
(5.80) (5.65)
Size 0.479 *** 0.405 ***
(46.16) (42.85)
Lev 0.125 *** 0.109 ***
(2.89) (3.01)
Growth −0.001 *** −0.001 **
(−3.10) (−2.12)
ROA −0.093 ** 0.032
(2.02) (0.98)
CF −0.344 *** −0.331 ***
(−3.53) (−5.95)
Indd −0.138 0.056
(−0.71) (0.31)
Tops −0.002 ** −0.001
(−2.06) (−1.04)
Constant −11.878 *** −10.129 ***
(−20.99) (−19.88)
Industry Yes Yes
Year Yes Yes
N 10,395 10,395
First-stage F-statistics 707.49 *** 707.49 ***
p-value 0.000 0.000
Wald test 6761.91 *** 6002.56 ***
p-value 0.000 0.000
Notes: **, and *** represent significance at the levels of 5%, and 1%, respectively, and t-statistics are in parentheses.

Table 9. Empirical results of regional heterogeneity.

East China Central China West China

Variables
(1) (2) (3)
DF 0.341 *** 0.191 *** 0.205 ***
(16.76) (6.55) (6.32)
Size 0.514 *** 0.598 *** 0.506 ***
(28.72) (16.62) (12.15)
Lev −0.036 0.329 * −0.029
(−1.04) (2.23) (−0.16)
Growth 0.000 0.0003 0.003
(−0.66) (0.31) (1.61)
ROA −0.0764 * −0.350 −0.674 *
(−2.00) (−1.25) (−2.44)
CF −0.126 0.334 0.157
(−1.94) (1.10) (0.45)
Indd −0.111 −0.193 0.131
(−0.46) (−0.42) (0.29)
Tops −0.006 *** −0.002 −0.006 *
(−4.39) (−0.89) (−2.30)
Constant 0.000 0.0002 0.000
(−0.00) (0.02) (0.00)
N 7737 2263 1550
adj.R2 0.2930 0.2601 0.2336
East versus West East versus Central West versus Central
Group difference test 11.37 *** 16.67 *** 0.1
p-value 0.001 0.000 0.753
Notes: *, and *** represent significance at the levels of 10%, and 1%, respectively, and t-statistics are in parentheses.
Sustainability 2023, 15, 3393 11 of 16

5.5.2. Enterprise Nature Heterogeneity

The economic activities of enterprises are impacted by their various natures. In order
to determine if digital financial effects on green technology innovation differ between
different corporate natures, this article separated all the samples of listed companies into
two categories: non-state-owned and state-owned. Table 10 shows that in state-owned
companies, the positive impact of digital financing on green technology innovation was
more visible. The group difference test also shows that this result is meaningful. Technology
spillovers brought by green technology innovation make it challenging for businesses
to realize maximum revenues. State-owned businesses have more benefits in capital
strength and risk-taking than non-state-owned businesses and experience fewer financial
constraints. They also have better financial resources [60]. Furthermore, strong external
supervision may compel state-owned companies to increase their innovation in green
technologies. Therefore, digital financing can better support state-owned firms’ innovation
in green technology.

Table 10. Empirical results of enterprise-type heterogeneity.

GTI
Variables
State Enterprise Non-State Enterprises
DF 0.295 *** 0.219 ***
(14.85) (9.76)
Size 0.575 *** 0.552 ***
(24.80) (27.78)
Lev −0.210 * 0.00815
(−2.05) (0.23)
Growth 0.00163 −0.000463
(1.79) (−1.18)
ROA −0.308 −0.0576
(−1.60) (−1.49)
CF 0.223 −0.111
−1.27 (−1.60)
Indd −0.0212 −0.216
(−0.08) (−0.72)
Tops −0.00914 *** −0.00282
(−6.14) (−1.73)
_cons −0.000512 −0.0000322
(−0.06) (−0.00)
N 5808 5742
adj.R2 0.2816 0.2792
Group difference test 5.68 **
p-value 0.0171
Notes: *, **, and *** represent significance at the levels of 10%, 5%, and 1%, respectively, and t-statistics are
in parentheses.

5.6. Results and Discussion

The empirical portion researched how digital financing affects green technology in-
novation. First, green technology innovation is positively impacted by digital financing;
green technology innovation rises by 9.5% for every 1% growth in digital finance. This
result is similar to Astadi Pangarso et al., Anu et al., Hung Bui Quang et al., and Rao et al.,
who further proved that digital finance could enable green technology innovation [61–64].
Additionally, digital technologies such as the internet of things and artificial intelligence can
support the development of green technology [65–67]. The paper also examines the effect
of three dimensions of digital financing on green technology innovation. The regression
coefficients of coverage breadth and use depth are 0.054 and 0.159, while the coefficient
of the digital degree is not significant; this provides some inspiration. It is necessary to
advance the development of digital financing to assist green technology innovation. Digital
finance contributes to the quick advancement of digital technology, which can provide
Sustainability 2023, 15, 3393 12 of 16

more opportunities for corporate green innovation [68]. Nevertheless, we should be aware
that the foundation of the digitization degree is not strong enough. Digitization has a
positive effect on green economy development [69]. Hence, promoting the comprehensive
development of digital finance is important.
Second, financial constraints act as an intermediary role; that is, digital finance ad-
vances green technology innovation by removing financial constraints. The coefficient of
digital finance to green technology innovation reduces from 0.095 to 0.073 after adding
the financial constraints variable. This result is also supported by Han et al. and Yang
et al., who found that digital finance significantly relaxed financial constraints [39,70]. In-
sufficient funds make it difficult to better integrate financial development with technology
innovation [71]. Digital finance offers solutions to this problem. It can decrease corporate
financing costs and create diversified financing channels [60]. Enterprises will increase
their investment with the decline in financial constraints [72]. Additionally, the mitigation
of financial constraints is also conducive to corporate technology innovation [73].
Third, the paper analyzes heterogeneity from the perspective of the region and equity
nature. Digital finance demonstrates a significantly positive driving influence on green
technology innovation in the eastern, central, and western areas, with coefficients of 0.341,
0.191, and 0.205, respectively. This result is similar to that of Wang et al., who found that the
positive effect of the digital economy on green technology innovation was more significant
in the eastern region [74]. In the group of equity nature, digital finance has a stronger
driving effect on green technology innovation of state-owned firms, and the coefficient is
0.295. This is different from Feng et al. [38], who concluded that digital financing could
better promote the green technology innovation of non-state businesses. Therefore, to
accomplish coordinated development, we need to consider the variations in the regional
economic environment and individual distinctions across businesses.

6. Conclusions and Policy Implication

6.1. Conclusions
This paper investigates how digital finance affects green technology innovation and
conducts robustness tests and heterogeneity analysis using data from public companies
from 2011 to 2020. The results obtained showed that, first, digital finance and its breadth of
coverage and use depth have positive impacts on green technology innovation. This result
also passed robustness tests through variable and model replacements. Second, financial
constraints are the functional channel for digital finance to encourage green technology
innovation. Third, the driven effect of digital finance on green technology innovation is
particularly visible in eastern regions and state-owned businesses.
From the conclusions above, the following suggestions are offered; first, in a society
with increasingly developed information technology, it is essential to accelerate digital
finance development and foster the balanced development of different dimensions. Mean-
while, we should tap into the diversified service capabilities of digital finance deeply,
deepen various financial service functions, and perfect digital financial infrastructure con-
struction. Second, to alleviate financial constraints, digital finance and traditional financial
institutions need to work together to open up the industrial chain of digital financial ser-
vices and assist in the financing of firm innovation activities. Third, we must promote a
balanced development of digital financing in different regions. We should increase support
for central and western enterprises, provide more innovation incentive policies for non-
state-owned enterprises, ensure the smooth flow of information and capital, and enhance
their capacity and drive for green technology innovation.

6.2. Policy Implication

The empirical findings of this paper have some policy implications and can be used as
a reference when creating new policies.
First, the development of digital finance needs to be emphasized. The government can
implement pertinent measures to enhance the macroeconomic environment and develop
Sustainability 2023, 15, 3393 13 of 16

acceptable and adaptable digital finance regulatory policies that are helpful for digital
financing to support innovation in green technology further.
Secondly, businesses should be encouraged to innovate in green technology. To
provide new financing avenues for businesses, the government can create fiscal and tax
incentives as well as other policies, such as tax and fee reductions, financial subsidies,
and other actions. The government should boost its investment in the development of
green technology.
Thirdly, there should be a focus on balanced development. To assist the green tech-
nology innovation projects, the government can implement appropriate policy incentives
based on the different equity nature and provide talent introduction measures for the
central and western regions. In promoting the construction of digital finance, policymakers
should concentrate on boosting the development of digital degrees and adjust measures for
local conditions to achieve the balanced development of different regions.
There are some limitations in this paper. First, a spatial spillover effect could result
from the driving effect of digital finance on green technology innovation, which is not
considered in the paper. Second, in addition to financing constraints, there may be other in-
termediary mechanisms. Future research can start from the perspective of spatial spillovers
and mine other intermediary mechanisms.

Author Contributions: Conceptualization, D.T. and W.C.; methodology, D.T. and W.C.; software,
Q.Z. and J.Z.; validation, D.T.; formal analysis, D.T., W.C., Q.Z. and J.Z.; investigation, W.C.; resources,
W.C.; data curation, W.C.; writing—original draft preparation, W.C.; writing—review and editing,
D.T., W.C., Q.Z. and J.Z. All authors have read and agreed to the published version of the manuscript.
Funding: This research received no external funding.
Institutional Review Board Statement: Not applicable.
Informed Consent Statement: Not applicable.
Data Availability Statement: Not applicable.
Conflicts of Interest: The authors declare no conflict of interest.

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