Artificial intelligence – driven digital finance and green innovation: evidence from India

Nenavath Sreenu and P.R.S. Sarma

International Journal of Managerial Finance, 2026, vol. 22, issue 5, 1176-1206

Abstract: PurposeThis study looks at the relationship between corporate green innovation, digital finance, and artificial intelligence (AI) in Indian listed companies. It also looks at whether digital finance makes the relationship between AI intensity and green innovation stronger.Design/methodology/approachPooled ordinary least squares and two-way fixed-effects models are used to account for firm- and year-specific heterogeneity in an unbalanced panel of 5,740 firm-year data for Indian listed enterprises between 2012 and 2024. Robustness analyses evaluate how stable the results are.FindingsAcross model specifications, corporate green innovation is positively and significantly correlated with AI intensity. A one-standard-deviation rise in AI intensity is linked to a roughly 1.1% increase in green innovation in the favored two-way fixed-effects model, suggesting a small but significant economic impact. By facilitating better access to financial resources for sustainable initiatives, digital finance reinforces this beneficial correlation. The findings should be taken as associations rather than causal effects because of the observational research approach.Practical implicationsEncouraging responsible AI use in conjunction with digital financial infrastructure may improve businesses' ability for green innovation and reduce funding barriers for sustainable investments.Originality/valueThe paper advances knowledge of the joint relationship between AI, digital finance, and corporate green innovation in an emerging country by presenting firm-level evidence from India and combining technological and financial viewpoints.

Keywords: Artificial intelligence (AI); Digital finance; Green innovation; Firm-level analysis; Sustainable development (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijmfpp:ijmf-03-2026-0201

DOI: 10.1108/IJMF-03-2026-0201

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