Rewiring sustainability: A systematic literature review on the transmission channels and boundary conditions of the FinTech-carbon nexus

Abstract

The transition of traditional economies to digital-financial paradigms (Industry 4.0) has generated conflicting environmental outcomes. While Ecological Modernization Theory suggests digitalization dematerializes economic activity, Jevons' Paradox and energy-intensive infrastructure investments raise concerns about environmental rebound effects. This systematic literature review (SLR) harmonizes these perspectives by analyzing the FinTech-Carbon Nexus across diverse economic contexts. Adhering to the PRISMA systematic protocol, 515 documents were identified in the Scopus database using a comprehensive query of carbon emissions and financial technologies, resulting in 33 core empirical papers published between 2023 and 2026. These papers were analyzed, coded, and categorized using second-generation econometric methods (such as Method of Moments Quantile Regression, Panel Vector Autoregression, CS-ARDL, Staggered DID, and Dynamic Spatial Durbin Models) across multiple economic blocs (OECD, E7, G20, BRICS-T, and CAREC). The synthesis reveals five primary transmission channels (Green Technological Innovation/Energy-Saving and Carbon-Reduction Innovations (ESCRI), Industrial Structure Upgrading, Green Total Factor Productivity, Frictionless Capital Mobilization, and Pro-Environmental Behavioral Adaptation) and four critical boundary conditions (the Technological Rebound Effect, Economic Complexity Gaps, the CAREC 'Green Paradox', and Institutional Quality). Empirical findings suggest that a 1% increase in urban FinTech is associated with a 0.0038% reduction in carbon intensity, with green innovation and renewable energy investments functioning as highly significant, primary drivers of global carbon mitigation. A context-specific, graded playbook is established to guide policymakers. This includes green regulatory sandboxes, tiered licensing, integration of personal carbon accounts with FinTech databases, and strict carbon footprint disclosure rules for energy-intensive digital infrastructures.