From Growth to Green: How Fintech Moderates the Environmental Impact of Trade and Electricity Consumption Using Panel ARDL‐PMG Approach

With the intensifying climate change issues, relatively little attention has been paid to how financial technologies influence the environmental implications of economic expansion. Even though previous research has examined the impact of trade openness and electricity use in relation to carbon emissions, the moderating role of fintech in these relationships has been a relatively uncharted area. The study attempts to close this gap by evaluating empirically how the development of fintech determines the environmental performance of trade and electricity use in 35 emerging economies between 1990 and 2023. The analysis employs the advanced technique of the panel pooled mean group autoregressive distributed lag (Panel PMG‐ARDL) estimation to include the short‐ and long‐term relationships among fintech, electricity use, trade openness, foreign direct investment (FDI), industrialization (IND), and urbanization (URB). The findings indicate that electricity consumption, trade openness, and FDI have long‐term positive effects on carbon emissions, while fintech also exerts a positive direct effect on emissions. But the negative environmental effects of trade openness and electricity consumption are considerably reduced by the role of fintech, which is important in terms of their moderating effect. The impact of URB and IND is found to vary across models and have mixed effects. In general, fintech shows a double effect, as it not only directly impacts emissions but also indirectly through mitigating effects on relevant growth drivers related to environmental sustainability. The current research presents new cross‐country data on the moderating effect of fintech on the growth‐environment relationship. The findings provide useful policy insights to integrate digital finance with sustainable development approaches and to build pathways to lower‐carbon growth in emerging economies.