Green fintech innovations and sustainable investment in MENA countries: the mediating and moderating role of digital finance adoption and ESG integration

Purpose This paper explores how green fintech innovations can affect sustainable investment in Middle East and North Africa (MENA) nations considering the mediating effect of adoption of digital finance and the moderating effect of environmental, social and governance (ESG) integration. Design/methodology/approach The data were collected by a structured questionnaire in the UAE, Saudi Arabia, Jordan, Egypt and Morocco and were completed by 450 financial managers, fintech professionals, sustainability officers and investment decision-makers. The study is conducted in the multi-country emerging-market context of MENA and recognizes institutional heterogeneity by adding extra robustness checks and controlling variables. Partial least squares structural equation modeling (PLS-SEM) was used to test the hypotheses. Findings The empirical evidence indicates that green digital payment systems and the green crowdfunding platforms have a positive impact on the use of digital finance as well as sustainable investment. Digital finance adoption has a statistically significant but weak positive increment of sustainable investment, whereas ESG criteria integration is a strong predictor of sustainable investment and at the same time supports the nexus relationship between digital finance adoption and sustainable investment. Conversely, the green blockchain technologies have statistically significant yet negative correlations with the two variables, namely, digital finance adoption and sustainable investment, thus, suggesting the existence of context-specific regulatory and operational constraints in MENA markets. Practical implications The results show that policymakers should focus on the creation of scalable digital payment and crowdfunding systems, and simultaneously, deal with regulatory and governance challenges that limit blockchain-based green finance. To increase the sustainability effect of the digital finance adoption, the frameworks of ESG integration should be improved. Originality/value The research has a value to the literature of sustainable finance in that it has shown that the efficacy of green fintech innovations in the emerging markets depends on the level of digital finance adoption maturity and the quality of ESG governance and, therefore, provides the location-specific evidence on the topic of the MENA region.