FinTech, Artificial Intelligence, and Green Finance as Synergistic Drivers of Renewable Energy Investment: Panel Evidence from the EU-27

Abstract

This study examines the individual and synergistic effects of FinTech development, enterprise artificial intelligence (AI) adoption, and green finance depth on renewable energy investment (REI) across all 27 European Union member states over the period 2014 to 2023. Utilising a balanced panel dataset of N = 270 country-year observations, the study employs a four-stage sequential estimation strategy comprising pooled OLS, country fixed effects, two-way fixed effects, and System GMM, supplemented by panel unit root and cointegration diagnostics and a six-specification robustness battery. The empirical results support all four research hypotheses. FinTech development exerts a large positive effect on REI (β = 0.399 (SE = 0.183, p = 0.031) in Two-Way FE; β = 1.731 (p < 0.001) in GMM), confirming the capital-democratisation channel of digital alternative finance platforms. Enterprise AI adoption exerts a positive effect (β = 0.008, p < 0.05), operating through enhanced credit risk assessment and ESG analytics. Green finance depth is the most consistently significant predictor (GMM β = 0.038, p < 0.001 (Two-Way FE absorbs common GF trend; see Section 4.6.3)), validating the EU Sustainable Finance Action Plan as an effective mechanism for channelling institutional capital into renewable infrastructure. Two of three pairwise interaction terms are statistically significant: AI×GF (β = 0.00043, p = 0.002) is positive, confirming AI–green finance complementarity, while FT×AI (β = −0.046, p = 0.001) is negative, indicating partial substitution between FinTech and AI at high joint adoption levels. The conditional marginal effect of FINTECH on ln(REI) declines from 1.924 (at P25 of AI, 8.74% of firms) to 1.272 (at P75, 23.06%), indicating that FinTech and AI operate as partial substitutes in the within-country panel dimension, suggesting that the three variables may constitute a mutually reinforcing digital-green financial ecosystem rather than independent additive channels.