The green paradox of digital finance: Fintech, resource dependence, and energy transition in CAREC economies

This study examines the factors influencing carbon emissions and energy transition in CAREC countries from 2000 to 2023, focusing on financial technologies, green technologies, natural resources, economic growth, and population growth. Addressing the measurement limitations of prior studies that rely on single proxies, we construct a multidimensional Digital Financial Services Usage Index based on five indicators from the World Bank Global Findex Database. Employing Method of Moments Quantile Regression (MMQR), we investigate heterogeneous effects across different quantiles. The results reveal a novel "green paradox": fintech significantly reduces CO 2 emissions but counterintuitively impedes energy transition, with this inhibitory effect intensifying in higher-transition countries (coefficients from −4.9956 to −8.6715). Green technologies consistently reduce emissions and promote energy transition across all quantiles. Natural resources significantly hinder energy transition (−0.3969 to −0.4751) but show no direct significant impact on CO 2 emissions, challenging conventional "resource curse" assumptions. Population growth impedes transition only in low-transition countries. These findings suggest that without deliberate policy intervention, fintech capital may flow to traditional sectors rather than green projects. Policymakers should prioritize economic diversification, guide fintech toward green projects, and accelerate green technology adoption. • Fintech reduces CO 2 across all quantiles but hinders energy transition in low- and middle-transition countries. • Green technology consistently lowers emissions and promotes energy transition, especially in early-stage countries. • Economic growth increases emissions across all quantiles, yet facilitates transition only in low-transition countries. • Natural resources and population growth significantly impede energy transition exclusively in low-transition countries.