Abstract: By leveraging the development of digital economy to reduce the dependence of local governments on land finance, it is not only an inevitable choice to enhance the sustainability of local finance, but also a necessary path to promote high-quality economic development. Based on the panel data from 277 prefecture level cities in China from 2011 to 2021, this study empirically explores the impact of digital economy development on the dependence of local governments on land finance and its mechanism. The findings show that the development of the digital economy can significantly reduce the dependence of local governments on land finance, but this impact exhibits heterogeneity due to the geographical location and resource endowment of the cities. The mechanism analysis indicates that the financial pressure plays an intermediate role in the process of digital economy development affecting local government’s land financial dependence, and that the economic growth pressure exerts a negative moderating effect. The threshold effect test reveals that there is a threshold effect of the impact of digital economic development on the dependence of local governments on land finance. When the level of digital economic development or the level of the construction of digital infrastructure cross the threshold value, its impact on the dependence of local governments’ land finance will be significantly strengthened. Therefore, it is suggested to accelerate the construction of digital infrastructure to lay the foundation for digital economic development reducing the land financial dependence of the local governments, continuously unleash the potential of data elements to transform the economic development model and solve the financial dilemma of local governments, and improve the local performance evaluation mechanism to continuously regulate the land transfer behaviors of local governments through institutional innovation.

Key words: digital economic development, local government, land financial dependence, financial pressure