Do Digital Finance and Energy Consumption Promote Sustainable Development in Emerging Economies?

Abstract

In the era of new economy, digital finance, a technology-driven version of finance, is crucial to achieving sustainable development goals. Digital finance leads to an increase in the use of energy, which may be a threat to the environment if the sources of energy are dominated by non-renewable ones. Hence, it is crucial to study the nexus of digital finance, energy consumption, and sustainable development. The objective of the study is to investigate the impacts of digital finance, renewable energy, and non-renewable energy consumption on sustainable development in 13 emerging economies over the period of 2011�2021 using Driscoll-Kraay standard error method. The findings of the study reveal that digital finance enhances sustainable development, whereas non-renewable energy consumption hinders it. In addition, foreign direct investment inflows, natural resource rent, and unemployment have detrimental impact on sustainable development, while trade openness promotes it. Based on the findings, the study proposes that emerging economies should promote digital finance, reduce non-renewable energy consumption, and design environment-friendly foreign direct investment policies to foster sustainable development. � The Author(s), under exclusive license to Springer Nature Switzerland AG 2024.