Fintech adoption, AI development, and energy transition dynamics

This study examines the impact of Fintech adoption on energy intensity and renewable energy use in 29 European countries between 2000 and 2022, focusing on the moderating roles of innovation and artificial intelligence (AI). Using the Method of Moments Quantile Regression, panel threshold models, and Granger non-causality tests, we find that adopting Fintech solutions consistently reduces energy intensity, with more potent effects in countries with higher energy inefficiency. Fintech also promotes renewable energy use, especially in countries with lower renewable energy shares. The interaction between Fintech and innovation amplifies these beneficial effects, while AI development demonstrates distinct patterns across different energy intensity levels. Further, our findings reveal specific thresholds in Fintech adoption that mark significant changes in its effectiveness concerning energy outcomes. The study also uncovers contrasting effects of financial institutions' and markets' accessibility on energy outcomes, suggesting the need for structural reforms in European financial systems to support better the energy transition, with particular attention dedicated to consolidating financial markets.