FinTech and Financial Stability in BRICS Economies

Abstract

This study examines the dynamic and distributional effects of financial technology (FinTech) and renewable energy (RE) on financial stability (FST) in BRICS economies from 2012 to 2022. Using a combination of Panel Autoregressive Distributed Lag (Panel ARDL) and Panel Quantile Regression (PQR) models, the analysis captures both short-run versus long-run adjustment mechanisms and heterogeneous effects across different levels of financial stability. The ARDL results reveal a dual effect of FinTech: while FinTech expansion initially increases short-run financial volatility, it enhances long-run stability as regulatory and institutional frameworks mature. Renewable energy consistently strengthens financial stability, with its impact intensifying in higher quantiles of the stability distribution. The quantile results further show that the stabilizing effects of FinTech, RE, institutional quality, and industrial development become stronger in more resilient financial systems. These findings highlight the need for BRICS policymakers to coordinate digital financial innovation with clean energy strategies under robust governance frameworks to promote a more stable, inclusive, and sustainable macro-financial environment.