FinTech-Enabled Pathways to Ecologically Sustainable Natural Resource Management in Asian and GCC Countries

Abstract

This research investigates the non-linear (quadratic) relationship between FinTech adoption and environmental performance in companies across MENA countries, addressing a gap in understanding how digital financial technologies affect sustainability outcomes. Using secondary data collected between 2016 and 2021, the study examines whether the growing adoption of FinTech tools produces U-shaped or inverted U-shaped effects on environmental performance, depending on the level of integration. The theoretical framework combines innovation theory with environmental management literature, proposing that FinTech initially improves environmental outcomes through increased efficiency, transparency, and automation. However, beyond a certain threshold, additional adoption may lead to diminishing returns or resource misallocation, generating a non-linear effect. The study applies panel data regression models incorporating both linear and squared terms of FinTech adoption to test the quadratic relationship. Findings indicate a statistically significant non-linear effect: while FinTech adoption initially enhances environmental performance, its benefits plateau and eventually decline when adoption exceeds an optimal level. This demonstrates the need for firms to carefully balance technology integration with sustainability objectives. The study offers valuable insights for policymakers and business leaders in the MENA region, highlighting points at which FinTech maximizes environmental benefits without excessive costs, and contributes to global discussions on sustainable digital finance and green innovation.

Keywords: FinTech adoption, environmental performance, natural resource rents, MENA region, sustainability, green finance, spatial econometrics