FinTech and Environmental Sustainability: Evidence From Brazil

ABSTRACT This study explores the dynamic interplay between economic growth and environmental sustainability from a FinTech perspective, using Brazil as a case study. While FinTech's contribution to green transformation, sustainable finance, and resource efficiency has gained increasing attention, a notable lack of empirical research remains to assess its direct environmental impacts. To address this gap, the study investigates how FinTech influences environmental quality by employing the load capacity factor as an indicator. Human development, economic growth, energy consumption, and trade openness are incorporated as control variables. The analysis covers the period from 1975 to 2024 and applies the Fourier Augmented Autoregressive Distributed Lag, with robustness checks conducted using Fully Modified Ordinary Least Squares and Canonical Cointegrating Regression estimators. The results demonstrate that FinTech exerts a positive and significant influence on the load capacity factor, implying improvements in environmental quality. Additionally, the Load Capacity Curve hypothesis is confirmed for Brazil. While energy consumption negatively affects environmental quality, the impacts of human development and trade openness are statistically insignificant. The findings suggest that FinTech could function as a strategic policy lever for advancing green transformation in Brazil. By facilitating the financing of environmentally friendly investments, digital financial innovations can play a vital role in achieving sustainable development objectives. Moreover, expanding FinTech‐driven solutions in areas such as energy efficiency, carbon monitoring, and environmental transparency may accelerate Brazil's transition toward a low‐carbon economy.