Digital Governance Leveraging Urbanization and Fintech Synergies for Sustainable Development in BRICS

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Digital Governance Leveraging Urbanization and Fintech Synergies for Sustainable Development in BRICS
Author: Chenyu Zhang
Journal: Scientific Reports
Volume: Volume 14, Article 31677
Published: 30 December 2024

This study investigates how financial technology (fintech) interacts with urbanization to influence environmental sustainability across BRICS nations from 2000 to 2022. Addressing a gap in existing literature—which has focused largely on economic and social impacts of fintech—the research examines whether digital financial tools can contribute to ecological improvements within rapidly urbanizing economies. Using advanced econometric methods, including second-generation unit root tests, Westerlund cointegration, Method of Moments Quantile Regression (MMQR), and Augmented Mean Group (AMG) estimation, the study evaluates multiple indicators of fintech development and their effects on pollution and carbon emissions.

The findings show that fintech adoption can meaningfully support environmental quality: a 10% rise in fintech usage is associated with a measurable decline in pollution, and AMG estimates indicate a 0.34% reduction in carbon emissions for each 10% increase in fintech development. However, urbanization itself exerts strong negative environmental pressure, with a 10% increase in urban population causing a substantial rise in emissions. Interactions between fintech and urbanization produce mixed outcomes—while fintech moderates some environmental impacts, combined growth can still contribute slightly to higher emissions.

The study argues that fintech-enabled digital governance, when paired with smart city initiatives and well-designed regulatory frameworks, can enhance sustainability outcomes. It recommends stronger ICT penetration, targeted environmental policies, and coordinated planning among BRICS governments, fintech firms, and urban authorities to ensure that digital innovation effectively supports sustainable urban development.