Green finance and digital transformation: how financial products drive sustainability in China

Abstract

This study focuses on the impact of financial technology adoption (FTA), financial robo-advisors (FRA) and virtual banking services (VBS) on sustainable performance in three separate but interconnected performance dimensions, including economic, social and environmental. This study employed a cross-sectional survey design with a quantitative methodology and stratified samples comprising 384 finance professionals in China. The questionnaire was constructed based on validated scales and measured using a five-point Likert scale. Data were filtered in terms of completeness and reliability, and PLS-SEM was conducted to test the measurement model and structural relationships. It has been found that of the 12 hypotheses tested, 8 were supported. VBS and fintech adoption (FTA) significantly strengthened green finance (GF), while robo-advisors had no significant effect (p = 0.055). GF, in turn, significantly improved economic and social performance but significantly reduced environmental performance (ß = −0.223, p < 0.05), pointing to a clear sustainability trade-off. Global financial connectivity improved economic performance and reduced environmental performance, but had no significant effect on social performance (p = 0.162). This study is relevant to sustainability and digital finance literature by showing how GF can be driven by digital financial innovations and impact different aspects of sustainable performance. This underscores the importance of subtle policy and strategic decisions to achieve a balance between economic, social and environmental objectives.