Does FinTech drive the circular agrifood transition? Empirical evidence from the European Union’s twin transition

The European Union’s twin of green and digital transition has increased interest in whether digital financial development (FinTech) supports more sustainable and resource-efficient economic systems. However, empirical evidence on how FinTech influences the circular agrifood economy remains limited. Therefore, this study examines these relationships across 29 European countries using panel data from 2000 to 2024. For this study, an entropy-weighted Fintech Development Index using ICT capital, financial-market scale, digital financial adoption, and rural connectivity. A dynamic panel ARDL-PMG-Fourier approach is used to capture the long-run relationships and short-run dynamics for resource productivity, circular waste, livestock emissions, and soil emissions. The results reveal the heterogeneous environmental effects of FinTech development. FinTech is associated with lower resource productivity in both the long and short run, suggesting a rebound effect in which digital financial expansion stimulates production and material use faster than efficiency gains. It also increases packaging-based circular waste in the long run, reflecting that digital financial expansion generates both environmental benefits and trade-offs. In addition, FinTech significantly increases livestock emissions and decreases soil emissions, indicating that it facilitates access to credit, increases herd size, and promotes precision agriculture and environmentally efficient production technologies for soil emissions. Furthermore, the robustness and heterogeneity analyses demonstrate that these effects differ between the 14 old members of the European Union and the 13 accession economies. These findings contribute to the literature by showing that digital financial innovation does not automatically promote circularity. It contributes to twin transitions through governance mechanisms, green finance, and technology-based regulatory frameworks that align FinTech with the circular economy.