FinTech and resource utilization: a governance-driven approach to managing ecological footprint in top emerging markets

Xin Sui, Zhihong Sun, Seemab Gillani, Muhammad Nouman Shafiq

Emerging economies are experiencing rapid industrialization and financial technology transformation, raising concerns about their deteriorating ecological footprints. This study examines the environmental implications of natural resource rents and financial technology with a particular focus on the role of governance in the Top-10 emerging economies from 1995 to 2023. Method of moments quantile regression (MMQR) captures the heterogeneous impact of ecological footprints across different quantiles. Results show that both natural resource rents and financial technology increase ecological footprints, while governance mitigates this effect, particularly in higher ecological footprint quantiles. Importantly, the interaction terms demonstrate that effective governance mitigates the environmental damage associated with natural resource rents and financial technology, a critical interaction with resource extraction and digital innovation that shows how they integrate with environmental goals. The MMQR findings are supported by bootstrap quantile regression (BSQR) and show that the estimated relationships are robust and consistent across various econometric methods. The potential endogeneity issue is appropriately addressed using the generalized method of moments (GMM), thereby enhancing the credibility and reliability of the empirical findings. Moreover, the findings of the Dumitrescu-Hurlin panel causality test support the idea of the complex relationship among the selected variables. These outcomes offer decisive recommendations to policymakers for sustainable economic growth, efficient use of natural resources, and effective execution of financial technology to meet environmental requirements, especially in the aftermath of COP28.