Financial Technology and Green Trade: Investigating the Mediating Role of Financial Inclusion and Financial Literacy

Abstract

This study investigates the effect of financial technology (Fintech) on green trade. We also evaluate the mediating role of financial inclusion and financial literacy in explaining the effect of fintech on green trade. We collect a panel of country-level data from 2010 to 2023. The current study deployed the structural equation model to estimate the results. Results reveal that fintech does not have a direct effect on green trade, while financial inclusion improves green trade. In contrast, financial literacy discourages green trade. The results also show that financial inclusion significantly improves the effect of fintech on green trade. However, financial literacy does not mediate the relationship. The extended results show that the mediating role of financial inclusion is similar among male and female using fintech and having access to financial services. While the mediating role of financial inclusion deviates among young and adults, and lower and higher qualified population, when analysing the effect of fintech on green trade. While the fintech- financial inclusion mediation effect is significant for green exports and net green exports but weak for green importing countries. The moderation -mediation analysis shows that the mediating role of financial inclusion in explaining the fintech and green trade relationship deviates among urban and rural populations, with level of population growth and with countries’ per capita income. Results are consistent with alternative proxies of fintech and financial inclusion. Results are similar when estimating the results with alternate estimator.

JEL Classification: F14, F19, G21, O33

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