Nexus between FinTech, renewable energy resource consumption, and carbon emissions.

Abstract

An increase in energy crises and environmental degradation has pushed countries to adopt more sustainable practices. In this situation, financial technology has played an important role to lower carbon emissions by integrating renewable energy resources that can help increase renewable energy resource consumption (REC) and lower carbon emissions (CE). To better understand this transmission mechanism, this study has collected a panel dataset of 26 Morgan Stanley Capital International (MSCI) developing countries for the 2011-2021 period. Furthermore, a proxy indicator for financial technology (FinTech) was developed by extracting relevant data from CrunchBase. Pooled ordinary least square and robust fixed effects technique was adopted to analyse the influence of FinTech on renewable energy and carbon emissions for robustness. Results of the study show that FinTech development promotes renewable energy resource consumption (REC) and discourages carbon emissions (CE), moreover, economic growth positively impacts, and carbon emissions (CE). This research emphasizes the importance of adopting financial technology as an important deterrent of further environmental damage. Additionally, in line with the results of this study, policymakers should design and implement an industrial policy which promotes sustainable economic growth which can pave the path for a circular economy model in the future.