Impact of FinTech, governance and environmental taxes on energy transition: Pre-post COVID-19 analysis of belt and road initiative countries

Abstract

This study investigated the FinTech, governance and environmental tax factors affecting energy transition in the Belt and Road Initiative (BRI) partner countries, in the context of COVID-19. A balanced panel representing 148 BRI partner countries, comprising 78 members from high- and upper-middle income developed countries and 72 members from low- and lower-middle income developing countries, with reference to the 2013–2021 period, was used for this study. This study employed a two-step system generalised method of moments (GMM) model, which was validated through the two-stage least squares (2SLS) method. The findings indicate that FinTech, globalization, and environmental taxes contributed significantly and positively to the energy transition in the entire BRI sample. However, inflation and COVID-19 had a significant negative impact on the energy transition, whereas urbanisation negatively and insignificantly impacted the energy transition. In developed countries, all variables except urbanisation, inflation, and COVID-19 had a significantly positive effect upon the energy transition. On the other hand, in developing countries, while FinTech, environmental taxes, and high-level governance had a significant positive impact, other factors negatively impacted the energy transition. Additionally, this study suggested a balanced policy implication and future work areas that would be helpful to policymakers, governments, and academia for boosting and exploring energy transition and related aspects.