With the development of the digital economy and the proposal of the ‘dual carbon’ goals, digital finance and carbon emissions have become hot topics in related fields of research. However, existing studies lack exploration of the mechanism of capital misallocation. This paper utilises data from 280 cities in China from 2011 to 2021 to conduct research on this issue. The results indicate that digital finance markedly lowers the intensity of urban carbon emissions, with capital misallocation serving as a mediating factor. Digital finance has an inhibitory effect on carbon emission intensity in non-old industrial base cities, eastern and central regions, but its impact on carbon emission intensity in traditional industrial base cities and western regions is not significant.

Yanan Wu. Digital Finance, Capital Misallocation, and Urban Carbon Emission Intensity. Academic Journal of Environment & Earth Science (2025), Vol. 7, Issue 4: 60-67. https://doi.org/10.25236/AJEE.2025.070407.

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