FinTech and economic readiness: Institutional navigation amid climate risks

• Published in: Research in international business and finance 2025-01, Vol.73, p.102543, Article 102543
• Main Authors: Ul-Durar, Shajara, Bakkar, Yassine, Arshed, Noman, Naveed, Shabana, Zhang, Beifan
• Format: Article
• Language: English
• Subjects: Climate action; Financial inclusion; Institutional Quality Moderator Model; Quadratic FinTech adoption function; Technology 4.0
• ISSN: 0275-5319
• DOI: 10.1016/j.ribaf.2024.102543

The current climate change is declared as a global boiling point by the UN; businesses are facing increasing costs in maintaining their supply chains and production standards and are being urged to adapt and innovate for environmental transition. With the Industrial Revolution 4.0, FinTech has helped develop households’ and firms’ resilience against climate change. This study explores how businesses use FinTech to increase economic readiness to attract adaptation investments. This study hypothesizes that, at initial levels of businesses, FinTech adoptions are typically targeted to improve profitability while, as businesses mature, their FinTech adoption shows a transition towards sustainability. Following this, the role of institutions in regulating an ecosystem is to promote sustainable financial innovations. This study employs a 114-country panel data analysis to investigate these dynamics empirically. The estimation using Panel Quantile Regression showed that institutional quality can moderate the U-shaped FinTech adoption and business readiness relationship to expedite the transition under Sustainable Development Goal 9. This research sheds light on the impact of institutional quality on improving businesses’ ability to attract adaptation investments via promoting sustainable innovation. Outcomes offer valuable insights for policymakers, firms, and investors seeking to foster a more resilient economy. [Display omitted] •Climate change has urged the need for economic readiness of businesses for survival.•The index of FinTech is developed using financial development and digitization.•FinTech has the potential to support business sector performance nonlinearly.•Institutions contribute to boosting FinTech adoption effectiveness for economic readiness.