Fintech, business regulations, and urbanization: Shaping the landscape of natural resource rent in G10 countries

Abstract

Natural resources play a crucial role in driving economic prosperity and technological innovations. However, the financial sector's evolution through Fintech advancements, rapid urbanization, and favorable business regulations has become indispensable for ensuring sustainable resource management. Against this backdrop, this study delves into the asymmetric impact of Fintech, business regulations, and urbanization on natural resource rent in the G10 countries. The selected countries exhibit diverse mineral resources, varying urban populations, and distinct regulatory controls. Linear econometric methods may distort the accuracy of the results due to these differences. To address this issue, the study employs the method of moment quantile regression (MMQR) using annual data from 2001 to 2020. The estimated outcomes reveal that Fintech significantly reduces mineral resource rent. However, this effect varies across quantiles. Business regulations drive resource consumption at higher quantiles, while urbanization diminishes resource reliance from lower to middle quantiles. The interaction term indicates that when G10 countries facilitate Fintech adoption in urban areas, it significantly enhances resource efficiency from lower to middle quantiles. To validate these findings, alternative panel estimations are conducted, confirming the earlier results and offering valuable policy insights.