Towards sustainable development: Can green digital finance become an accelerator for reducing pollution and carbon emissions in China?

As a fusion of financial "digitalization" and "greening", green digital finance is crucial for ecological quality enhancement. Based on panel data from 285 cities in China spanning 2011 to 2021, this study aims to examine the synergistic impact of Green Digital Finance (GDFO) on Pollution and Carbon Reduction (PCR). The two-way fixed effect model, moderated effect model, and threshold model are employed to study the direct, transmission, and non-linear effects of GDFO on PCR. Results indicate that GDFO significantly enhances PCR in urban areas, and this conclusion remains valid after several robustness tests. Mechanically, encouraging green technology innovation, promoting industrial structure upgrading, and enhancing financial supervision are effective channels for strengthening the impact of GDFO on PCR. At varying levels of green digital finance and financial supervision, the marginal impact of GDFO on PCR exhibits double threshold characteristics in the form of "U-shaped" and "inverted U-shaped". Furthermore, the impact of GDFO on PCR is more pronounced in the eastern and western regions, resource cities, and cities with a high level of financial development, excellent digital infrastructure, and robust environmental regulation. This study offers theoretical support and empirical evidence for deepening the GDFO to promote PCR at the city level.