Advancing ESG through FinTech in the MENA region: The Role of Sustainable Financial Behaviour and Digital Financial Literacy

Abstract

Financial technology (FinTech) is rapidly transforming. It presents new opportunities to promote sustainability, but the behavioural mechanisms through which digital finance can help achieve environmental, social and governance (ESG) outcomes remain poorly understood. This study aims to explore the contribution of Sustainable Financial Behaviour (SFB) to ESG through FinTech adoption and Digital Financial Literacy (DFL). Based on the behaviour approach to sustainable digital finance, the study proposes a sustainable digital finance model and empirically investigates it. The data are gathered using a structured questionnaire and analysed using partial least squares structural equation modelling (PLS-SEM). The findings reveal that the DFL has a significant positive effect on SFB, and that FinTech adoption also has a positive effect on SFB. The interpretation of SFB is related to ESG; there is a strong positive correlation between them. The mediation analysis shows that SFB fully mediates the relationships between DFL, FinTech, and ESG. In addition, DFL significantly affects the link between FinTech adoption and SFB, but in a negative direction: the greater the level of digital financial literacy, the smaller the marginal behaviour contribution of FinTech adoption. The moderated mediation effect, however, is not statistically significant. The results reveal that the sustainability impact of FinTech is not only tied to technological adoption but also to users' digital financial skills and their capacity to convert digital financial opportunities into sustainable financial behaviours. This study fits into the newly developing body of literature on the FinTech–ESG nexus by focusing on individual financial behaviour as a focal point of the relationship between digital finance and sustainability, and provides implications for the design of FinTech products, financial institutions and policy makers wishing to ensure digital finance aligns with the objectives of sustainable finance.

Keywords: FinTech adoption; digital financial literacy; sustainable financial behaviour; ESG; sustainable finance; digital finance; MENA region; PLS-SEM