The Dynamic Impact of Financial Technology and Energy Consumption on Environmental Sustainability

Abstract

This research investigates the dynamic interplay between financial technology, information and communication technology, energy consumption, and economic growth on environmental sustainability within Emerging and Growth-Leading Economies (EAGLEs) from 2005 to 2020. Utilizing advanced econometric techniques, such as Fully Modified Least Squares (FMOLS) and Vector Autoregressive Error Correction Model (VECM), the investigation scrutinizes the hypothesized relationships among these variables. Panel unit root tests were deployed to assess stationarity, while panel least squares methodology was employed to determine the presence of co-integration among the variables under study. The analysis reveals that internet usage, GDP, and renewable energy consumption exhibit a notable influence in diminishing CO2 emissions within EAGLE economies. Additionally, the findings substantiate the existence of long-term causality originating from these variables and impacting CO2 emissions. Conversely, the role of ATM networks in CO2 emissions remains ambiguous, implying that financial technology’s influence on environmental sustainability is inconclusive. Consequently, the research posits that environmental sustainability in EAGLE economies is chiefly determined by factors such as internet usage, economic expansion, and renewable energy consumption, with financial technology demonstrating no discernable impact. In light of these findings, the study advocates for the reevaluation and adaptation of existing policies and strategies to account for shifting climatic conditions. By doing so, decision-makers can better align their efforts with the pursuit of environmental sustainability in the context of rapidly evolving economies.