IMPACT OF FINANCIAL DEVELOPMENT AND FINANCIAL TECHNOLOGY ON GREEN GROWTH

Abstract

Financial development and financial technology (Fintech) are well-known as important roles in economics which have the potential to promote sustainable economic growth and support environmentally-friendly initiatives, On the other hand, there also can damage the economy and environment. Most of the studies measured both economic and environmental performance by the green growth index which is used as a proxy of the dependent variable for measuring overall performance in terms of economic development, environmental sustainability, policy response, and quality of life, therefore, this study aims to investigate the impact of the financial development and financial technology on green growth using the generalized method of moments (GMM) based on the 25 High, Upper-middle income country with panel data during 2013 to 2021. This study employs principal component analysis (PCA) to construct an index with higher dimensions which are the financial development index that constructs from 4 dimensions consisting of access, dept, stability, efficiency, and financial technology index using a number of transactions through financial technology such as ATM, Point of sales and E-payment. The result of this study shows the result that financial development does not significantly on green growth. Despite, fintech has a positive significant effect on green growth, the interaction terms of fintech and financial development have a negative significant effect on green growth. These results suggest that policymakers and industry leaders should consider the potential environmental impacts of fintech and financial development when designing, and implementing policies and strategies