Fintech development influences on corporate ESG performance: evidences from Southeast Asia

This study examines the relationship between fintech development and corporate environmental, social, and governance (ESG) performance in Southeast Asia. The effectiveness of ESG practices in achieving corporate sustainability is widely discussed, but the specific impact of fintech development on ESG performance in the Southeast Asia region remains unexplored. To determine the relationship between variables, we employed a fixed effects model. The research findings indicate that firms operating in highly developed fintech cities tend to exhibit better ESG performance. After model treatment through utilizing Generalized Least Square for treatment of heteroskedasticity and cross section dependence, the results further emphasize that firms that are located in a high-level of fintech development cities with high level of capitalization demonstrate stronger ESG performance. However, other elements such as growth, leverage, profitability and cashflow do not seem to have an effect on ESG performance based on the results of the model. These factors contribute to the overall effectiveness of corporate sustainability initiatives. Additionally, heterogeneity analysis reveals that the influence of fintech development on ESG performance is consistent across both large and small firms operating in high-tech industries. In other words, this emphasizes fintech development's role in promoting sustainable social and economic development, regardless of size or industry. These findings offer new insights into the significance of fintech development in driving sustainable practices and advancing social and economic progress. By understanding the interplay between fintech and ESG performance, policymakers and businesses can make informed decisions to foster sustainable development in Southeast Asia.