Fintech, Green Finance, and Economic Growth: A Comparative Analysis of Developed and Developing Economies

Abstract

This study examines the dynamic relationship between financial technology, green finance and economic growth through a comparative analysis of developed and developing countries. To achieve this, it employs a novel econometric approach named as Dynamic Common Correlated Effects (DCCE) model. It addresses cross-sectional dependence over the period 2004-2024. This method captures the dynamic interactions among variables and ensures robust estimation of both long-run and short-run effects. The empirical findings indicate that financial technology and green finance exert a statistically significant and positive influence on economic growth in both groups of countries. In developed economies, digital financial technology and green investment emerge as major drivers of growth. Meanwhile, the control variables as capital accumulation and the employed labor force are also demonstrate a direct and significant contribution to GDP. These results provide strong empirical support for the Solow growth framework, which posits that inputs such as labor, capital, and technological advancement enhance long-term economic performance. From a policy perspective, governments should prioritize the expansion of digital financial infrastructure through investment. Furthermore, countries should implement targeted green financing strategies to support environmentally sustainable.