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Driving green factor productivity in OECD economies: the effect of fintech, sectoral foreign investment, environmental funding and regulatory power

Muhammad Adnan Afzal,Saif Ur Rahman,Hafiz Waqas Kamran,Yasir Iqbal,Mehwish Rasheed

Published 2025 in Kybernetes

ABSTRACT

The purpose of this study is to examine the influence of Fintech (FNT), sectoral foreign fund inflows and environmental expenditure on green factor productivity (GFP) through regulatory strength (RES) in 38 Organization for Economic Cooperation and Development (OECD) countries from 2000 to 2022. The study uses the quarterly observation during 2000–2022. The methodological structure encompasses the essential preliminary tests entitled cross-sectional dependence, slope heterogeneity, unit root test, cointegration investigation and Method of Moments Quantile Regression (MMQR). The initial outcomes exhibit that OECD countries are interdependent with stationary data trends, heterogeneous slope coefficients and cointegrated linkage. The MMQR outcomes exposed that FNT, foreign investment in agriculture and mining, environmental protection expenditures, and economic growth exhibit a predominantly negative trend, reducing GFP across all quantiles. Conversely, the impact of foreign investment in the service sector, along with the effect of RES and industrialization, is positive, which improves GFP in OECD economies. The robustness checks likewise verify the MMQR estimations, yet the values of their parameters differed. These results urge policymakers to adopt extensive strategies that limit the negative impacts of FNT, foreign investment in agriculture and mining, environmental protection expenditure and economic growth while promoting foreign investment in the services sector, robust regulations and industrialization. This study is a pioneering exploration of green productivity in OECD economies, while employing advanced econometric models in novel ways and focusing on the roles of FNT, sectoral FDI, environmental protection expenditure and RES. Besides, it also offers actionable, innovative policy recommendations to address contemporary environmental and economic challenges.

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