Advancing Green Finance through FinTech Innovations: A Conceptual Insight into Opportunities and Challenges

Zohaib Naeem Babar; Wan Wu

doi:10.69565/jems.v4i1.404

Authors

Zohaib Naeem Babar University of Utara Malaysia, Malaysia
Wan Wu School of Economics and Management, University of Science and Technology Beijing, Beijing, China

DOI:

https://doi.org/10.69565/jems.v4i1.404

Keywords:

Green Finance, Sustainable Finance, Environmental, Governance (ESG), Financial Technology, FinTech

Abstract

The broader aim of this study is to investigate how FinTech innovations could transform the green finance landscape by enhancing its efficiency, transparency, and accessibility to local communities, thereby promoting environmental sustainability and climate change mitigation. Using a systematic review of the literature and content analysis method, this research studies peer-reviewed articles, industry reports, and regulatory papers covering 2014 to 2024, aiming to characterize developments in Environmental, Social, and Governance (ESG) factors, market barriers, structuring, distribution, regulatory frameworks, and stakeholder ramifications. Our main findings show that FinTech tools such as blockchain technology, smart contracts, and digital platform ecosystems enable a major advancement in the accuracy and coverage of ESG authenticated information reporting and compliance, capital liquidity, standardization issues, and transformational structuring and distribution of green finance instruments. However, as the research continues this topic, there are unmet needs, including regulatory gaps, greenwashing risk, and the absence of a global standard. It concludes that FinTech’s incorporation into green finance is an opportunity to promote sustainable finance. The strategic recommendations include creating harmonized global standards, promoting regulatory innovation, enabling cross-sector partnerships, and investing in education. These not only facilitate the understanding of specific applications but also serve as a foundation for future research on social and environmental impact studies of FinTech projects in the green finance domain. It entails both a specific matter, namely, the impacts of finance technologies on the green finance market, and general insights into the concatenation of (particularly) empirical studies in finance on FinTech.

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