Assessing the impact of tech-driven financial development and IT governance on environmental funds in emerging economies

Type of the article: Research Article

Abstract
The transition toward low-carbon economies has become a central environmental priority worldwide, requiring nations to allocate adequate resources for conservation efforts. However, emerging economies often face chronic shortages of environmental conservation funds, constraining their progress toward sustainability. Addressing this challenge, the present empirical study examines the dynamic influence of tech-driven financial development on national environmental conservation funds, with IT governance introduced as a moderating factor. Using a panel dataset of 55 emerging economies from 2004 to 2023, the analysis employs the two-step system generalized method of moments (sys-GMM) and dynamic panel data estimation (DPDE). The results reveal that both tech-driven financial development and IT governance significantly increase environmental conservation funds, with coefficients of 1.633 (p < 0.05) and 1.272 (p < 0.01), respectively. Moreover, their interaction produces a further positive moderating effect, with a coefficient of 1.294 (p < 0.01), indicating that strong IT governance enhances the effectiveness of tech-driven financial systems in scaling and optimizing environmental conservation funds. These findings underscore the need to integrate technological innovations in finance with robust IT governance frameworks to strengthen environmental financing in emerging economies. Policy recommendations are offered based on the empirical outcomes. The empirical investigation conclusively demonstrates that both tech-driven financial development and robust IT governance serve as pivotal catalysts for the mobilization of environmental funds within emerging economies. Crucially, the observed synergistic interplay between these two elements indicates that well-structured digital governance frameworks significantly amplify the efficacy of financial technology in channeling resources toward environmental conservation.