ADVANCING SUSTAINABLE DEVELOPMENT THROUGH GREEN FINANCE AND FINTECH: EVIDENCE FROM PAKISTAN

Abstract

Globally, countries are increasingly integrating green growth into their economic strategies, yet in South Asia, the interplay between FinTech, green finance, and green growth remains underexplored. This study investigates the factors driving green growth through FinTech innovations alongside green financial mechanisms and identifies their primary channels in Pakistan. The population includes all financial sector entities in Pakistan, with time-series data from 2010 to 2023 sourced from the International Monetary Fund (IMF), World Development Indicators (WDI), and Asian Development Bank (ADB). The analysis examines both short-term and long-term effects using Granger causality tests combined with Autoregressive Distributed Lag (ARDL) and Vector Autoregression (VAR) models. Findings indicate that FinTech and green finance act as key drivers of green growth. While macroeconomic instability in Pakistan limits the direct impact of FinTech on green growth, instruments such as green bonds and crowdfunding demonstrate a 20% mediating effect. The influence of FinTech and green financial solutions on green growth varies across South Asian countries due to unique regional characteristics. The study highlights that FinTech promotes green growth primarily by enhancing green finance channels. Overall, this research provides a comprehensive framework for understanding how FinTech can accelerate sustainable development and low-carbon infrastructure in emerging economies.