Fintech's impact on conventional and Islamic sustainable equities: Short- and long-term contributions of the digital financial ecosystem

Mahdi Ghaemi Asl, Sami Ben Jabeur, Seyedeh Sana Hosseini and Hamed Tajmir Riahi

Global Finance Journal, 2024, vol. 62, issue C

Abstract: This study investigates the integration of cutting-edge financial technologies, such as distributed ledger diversity, next-generation payment trackers, democratized banking, and cryptocurrency, and their impact on global sustainability and ethical ratings in Islamic markets. Our analysis spans the period from May 31, 2018, to May 10, 2023, and uses a novel analytical framework based on quantile time–frequency connectedness and causality analysis. Results showed that democratized banking, future payment opportunities, and sustainability-screened markets had stronger associations than distributed ledger technologies and crypto-based tokenization. Second, Islamic sustainable markets have slightly closer ties to the digital financial ecosystem than traditional responsible investments. Third, causality analysis revealed bidirectional relationships between sustainable markets and democratized banking and potential payment opportunities in the short to mid-term. Fourth, in the short term, there was unidirectional causality from conscious markets to investments in digitized currencies and blockchains; however, no long-term causality between the digital financial ecosystem and sustainability investments. Fifth, the diversity of distributed ledgers had a limited relationship with green investments, whereas advanced transaction monitoring platforms and inclusive financial infrastructure could serve as catalysts for nature-based portfolios. These findings inform policymakers in green finance and provide insights for digital financial network strategists, investors, and regulators, enabling sustainable interdisciplinary investment practices. This comprehensive examination sheds light on the evolving landscape of sustainable finance in the context of rapidly advancing financial technologies, paving the way for informed decision-making and strategic planning in the field of green investments.

Keywords: Financial ecosystem; Sustainability; Future payments; Distributed ledger technology; Inclusive banking; Cryptocurrency; Blockchain (search for similar items in EconPapers)
JEL-codes: D53 G17 M13 Q56 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:glofin:v:62:y:2024:i:c:s1044028324000942

DOI: 10.1016/j.gfj.2024.101022

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