FinTech development and sustainability development: a natural experiment in China

Purpose This study aims to assess whether targeted Financial Technology (FinTech) policy interventions enhance sustainable finance outcomes in China, focusing on whether FinTech innovation can act as a driver of environmental sustainability. Design/methodology/approach Using the establishment of the Beijing FinTech and Professional Service Innovation Demonstration Zone in 2018 as a natural experiment, this research applies a difference-in-differences (DiD) framework to bank and firm-level panel data from 2011 to 2023. The study identifies the impact through the interaction term between the treated region and the post-policy period, allowing estimation of both direct and spillover effects on FinTech-related patent filings, green patent applications, and green loan issuance by nonfinancial firms. Findings Empirical results show that the policy significantly increased FinTech-related patenting by banks, which in turn enhanced their capacity to extend green lending. Positive spillovers are also observed among nonfinancial firms, reflected in higher green patent output. These findings confirm a strong link between digital financial innovation and sustainability outcomes. Practical implications The results highlight that targeted FinTech policies can simultaneously foster technological innovation and sustainable finance, offering a replicable model for other regions. Policymakers can leverage FinTech clusters, regulatory sandboxes and coordinated policy support to stimulate green finance and advance sustainable development goals. Originality/value This thesis contributes novel empirical evidence on the role of place-based FinTech policies in promoting sustainability. It extends existing literature by linking FinTech innovation directly to green lending and environmental patenting via the DiD interaction term, thereby demonstrating the effectiveness of financial innovation zones as policy instruments for sustainability transitions.