Fintech and the sustainability nexus: empirical insights from FDI, urbanization and economic growth using QARDL analysis

Purpose This study aims to examine the inter-relationships between environmental sustainability (ES), financial technology (FT), urbanization (URB) and foreign direct investment (FDI) at various quantiles. Design/methodology/approach This study utilizes the quantile autoregressive-distributed lag (QARDL) methodology. The QARDL approach allows for a broad analysis that accounts for the heterogeneity of impacts across various levels of the variables. Using the data from 1998Q1 to 2023Q1, the study assesses the influence of FT, URB and \+++++I on ES by evaluating long- and short-run dynamics for the Indian economy. The robustness of the model was evaluated using several comprehensive diagnostic tests. Findings Long-run estimation of the QARDL model reveals that all independent variables have a positive and statistically significant impact on ES, particularly in the lower and middle quantiles. The short-run counterparts show similar results. Most importantly, the error correction term is found to be negative and significant across all quantiles. The results of the Granger causality test reveal bidirectional causality among the variables. Originality/value The study integrates FT as a driver of sustainability. It reveals that FT significantly reduces CO2 emissions at lower and median quantiles but has diminishing or no impact at higher quantiles, reflecting saturation and unequal access in high-growth phases.