Environmental Impact Assessment of Spatial Spillovers Relating to Fintech Innovation in the Largest Emerging Economies: Evidence from Multiscale and Nonlinear Approaches

The literature on the underlying factors of environmental sustainability has flourished in recent decades. Despite the increasing attention given to improving environmental quality, few studies have focused on the catalysts for environmental balance. This research aims to explore the spatial spillover effects of financial technology (FINT) on load capacity factor dynamics (LOCAFD) as a proxy for environmental balance dynamics. The present study applied the panel smooth threshold regression (PSTR) approach and the dynamic Spatial Durbin model (SDM) with Lee-Yu transformation in order to identify the determining factors of LOCAFD in the case of 10 emerging market economies. The outcomes of the study reveal that only under the high threshold of natural resources, Fintech innovation positively affects the LOCAFD. The results from both PSTR and SDM indicated the absence of beneficial effects of natural resources on the LOCAFD. Likewise, the results support the positive moderating effect of FinTech on the relationship between financial development and the load factor dynamics. Although FinTech and financial development individually exert significant negative direct effects on the LOCAFD, the results disclose that, using the spatial economic weighting matrix, the interaction term between FinTech (FINT) and financial development (FD) is positive and highly significant for direct, indirect, and total effects. Finally, the findings reveal that the spatial spillovers of Fintech have a beneficial impact on the environmental balance dynamics for economically similar countries, while their effects become negative for geographically closed economies. The integration of an approach combining both spatial dynamics, as well as the non-linear methods, can provide clarification to decision-makers regarding the most appropriate financial technologies and strategic management of natural resources to be implemented to accelerate environmental balance dynamics for the case of emerging market economies.