FINTECH PENETRATION AND CLIMATE-SMART INFRASTRUCTURE: EVIDENCE FROM RENEWABLE ENERGY FINANCING IN THE GLOBAL SOUTH

Abstract

This study investigates the impact of financial technology (fintech) penetration on renewable energy investment in developing countries between 2010 and 2024. Drawing on a balanced panel dataset covering 60 developing economies, the study constructs a Fintech Penetration Index (FPI) based on subcomponents including mobile payments, digital lending, and crowdfunding. Using fixed effects and system GMM estimators, the empirical analysis finds a robust and statistically significant relationship between fintech diffusion and renewable energy investment. Specifically, a 1% increase in FPI is associated with a 0.487 unit rise in renewable investment, with individual fintech components also exhibiting positive and significant effects. The findings remain robust across alternative specifications, sensitivity tests, and post-estimation diagnostics. The results highlight the critical role of digital financial systems in lowering financing barriers, enhancing institutional quality, and enabling green capital flows. Policy implications suggest that fintech should be integrated into national green investment strategies, with regulatory frameworks designed to foster innovation while ensuring sustainability and financial inclusion. Future research should explore disaggregated impacts at the firm and household levels, and assess the interplay between fintech adoption, regulatory capacity, and environmental governance.