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The moderating role of ESG scores on the relationship between FinTech adoption and financial performance: evidence from Middle East banks

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Listed:
  • Mohammad Zakaria Alqudah

    (Universitat de Valencia)

  • Laura Sierra-García

    (Universidad Pablo de Olavide)

  • María Antonia Garcia-Benau

    (Universitat de Valencia)

Abstract

The integration of the principles of environmental, social, and governance (ESG) with financial technology (FinTech) transforms global banking. This study examines how ESG and FinTech scores together affect the financial performance of banks in the Middle East and solves a critical gap in research on emerging markets. Based on panel data of 52 banks in 5 years (2018–2022), the study uses robustness econometric models to consider the preload of the selection, endogeneity, and heterogeneity. The findings show that while the higher ESG and FinTech integration scores negatively correlate with short-term financial performance, ESG relieves the impact of FinTech, suggesting that sustainability reflections can alleviate the benefits of technological innovation. Furthermore, the findings underline the complexity of reconciling digital transformation with sustainable financial goals. The study recommended that policy creators promote regulatory frameworks that put ESG into FinTech strategies, support investments in ESG, and support banks in control of the transition toward resistant and responsible banking systems. This study offers fresh knowledge of dynamics in the Middle East and requires a wider global investigation by ESG–FinTech.

Suggested Citation

  • Mohammad Zakaria Alqudah & Laura Sierra-García & María Antonia Garcia-Benau, 2025. "The moderating role of ESG scores on the relationship between FinTech adoption and financial performance: evidence from Middle East banks," Economic Change and Restructuring, Springer, vol. 58(6), pages 1-50, December.
    • Handle: RePEc:kap:ecopln:v:58:y:2025:i:6:d:10.1007_s10644-025-09927-7
    DOI: 10.1007/s10644-025-09927-7
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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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