Revolutionizing Finance for the Environment: An Empirical Examination of the Role of Financial Technology in Shaping Environmental Sustainability

Abstract

A while back, the general populace has been aware of environmentalists' worries about excessive power consumption, notably in cryptocurrency mining. Regarding this, regulators and stakeholders have been reassessing the costs and advantages of technological advancement in general, along with Fintech, concentrating their efforts on environmental restoration. Considering that technology has customarily been seen as having both positive and negative effects on the environment, now would be a good moment to evaluate its actual contribution to environmental improvement—or, conversely, environmental destruction. Therefore, this study attempts to empirically explore the relationship between fintech and environmental sustainability in the presence of GDP and fossil fuel consumption as control variables in the Indian context. The data utilized in this research have been collected for the period of 2001-2021. By employing the Johansen cointegration test and Vector Error Correction Model, the summary of the findings of this study suggests that fintech, GDP, fossil fuel consumption, and carbon emission have short-term as well as long-term relationship, where fintech and GDP have detrimental effects on carbon emission whereas fossil fuel consumption positively affects the same. Necessary policy ramifications have also been provided so as to contend with the demanding situations.