The Arab Monetary Fund released a study on:
Is Climate FinTech Effective in Mitigating Climate Change Risk?
- The study aims to investigate the cause-and-effect relationship between the FinTech index and carbon dioxide emissions index globally.
- The study findings indicate that there is not a cause-and-effect relationship between the global FinTech index and the carbon dioxide emissions index, which indicates that climate FinTech tools and applications are environmentally friendly.
- These results will be crucial for governments and corporate and policymakers who are looking at climate FinTech tools and applications as a potential means of reducing climate change risks and achieving the sustainable development goals.
In line with its continuous efforts to support the decision-making process in the Arab countries, the Arab Monetary Fund (AMF) has released a study titled “Is Climate FinTech Effective in Mitigating Climate Change Risk?”.
Global climate change and global warming are typically attributed to human activity, especially after the industrial revolution. There is a growing consensus among climate scientists that Climate FinTech provides great potential to protect the environment and mitigate climate change risks. In this paper, we investigate the cause-and-effect relationship between the FinTech index and carbon dioxide emissions index globally. In doing so, Granger causality test and Wavelet coherence analysis are employed to evaluate this association using daily frequency data over a period of 30 June 2015 to 31 December 2021.
The study findings indicate that there is not a cause-and-effect relationship between the global FinTech index and the carbon dioxide emissions index, which indicates that FinTech adoption does not result in any global carbon dioxide emissions. In addition, the analysis of continuous wavelet coherency found that there is no statistically significant coherence between FinTech index and carbon dioxide emissions index across time horizons, and no arrows appeared in the significant area, demonstrating that financial technology adoption does not correlate with global carbon dioxide emissions. To put it another way, according to the results of this study, climate FinTech tools and applications are environmentally friendly.
With the study limitations in mind, those results would be useful for governments, corporate, and policymakers looking at climate FinTech tools and applications as a potential way of reducing climate change risks and achieving sustainable development goals.
A full version of the study is available at the link:https://www.amf.org.ae/en/publications/economic-studies/climate-fintech-effective-mitigating-climate-change-risk-analysis
