Abstract
The rapid growth of the ecological footprint within the European Union (EU) has indicated a strong need for new and innovative approaches to sustainably managing natural resources. To this end, this study delves into how to harness the power of financial technology (FinTech) by infusing the principles of circular economy and technological innovation to address the growing ecological footprint. This study aims to explore the intricate interplay of natural resources, circular economy, and technological innovation on the effect of ecological footprint, particularly focusing on FinTech as a moderator in these relationships. The common correlated effects mean group (CCGMG) estimator addresses panel data's heterogeneity and cross-sectional dependence, which is essential for understanding the complex nature of ecological footprint issues. The evidence from 27 EU countries spanning 2013 to 2021 suggests that while more natural resources are used, the ecological footprint will increase, but improving circular economy practices and technological innovation will massively reduce this increase. Specifically, a 1% increase in natural resources leads to a corresponding 0.079% rise in ecological footprint, while a 1% increase in the circular economy and technological innovation reduces ecological footprint by 0.328% and 0.326%, respectively. Furthermore, FinTech stands out as a pivotal moderating force in amplifying the positive effects of circular economy and technological innovation towards ecological sustainability. Notably, it cushions the negative impacts of natural resource use and reinforces the power of sustainable practices on the footprint-reducing effect. From that angle, several targeted policy recommendations are proposed to harness FinTech's capabilities of resources and waste management, optimizing financial capital allocation, and enhancing financing efficiency. The study provides valuable insights and practical recommendations for promoting green initiatives within the EU and globally, aligning with the overall objectives of environmental sustainability and economic resilience.
Published Version
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