Does Fintech lead to enhanced environmental sustainability? The mediating role of green innovation in China and India

Fintech and green innovations are increasingly recognized as potential solutions for enhanced environmental sustainability. In this paper, we investigate the impact of Fintech on environmental sustainability through the lens of green innovation in manufacturing. Using questionnaire data from 477 manufacturing firms in China and India between February and June 2024, the study employs Partial Least Squares-Structural Equation Modelling to analyze the dynamic relationships. We find that both Fintech and green innovation significantly contribute to improving the environmental sustainability of manufacturing firms. Results further show that Fintech positively supports manufacturing firms' green innovation developments. Moreover, green innovations partially mediate Fintech's effect on environmental sustainability. Our results also highlight regional differences: the impact of Fintech and green innovation on environmental sustainability is stronger in China than in India. Additionally, Fintech's role in supporting green innovations is more pronounced in Chinese firms than in India. The paper highlights the importance of investments in Fintech and green innovation by manufacturing firms, particularly in emerging markets, to address environmental issues for sustainability.