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DIGITAL TRANSFORMATION, GREEN ENERGY TRANSITION AND INSTITUTIONAL QUALITY AS DRIVERS OF FINANCIAL PERFORMANCE: EVIDENCE FROM EMERGING ECONOMIES USING THE MMQR APPROACH
Abstract
Abstract
Purpose
This study examines whether digital transformation, renewable energy transition and institutional quality influence financial performance across emerging economies and whether these relationships differ across the conditional distribution of financial performance.
Design/methodology/approach
Drawing on the resource-based view, institutional theory and the technology sustainability perspective, the study conceptualizes digital transformation, renewable energy transition and institutional quality as country-level drivers aligned with the technological, environmental and governance dimensions of sustainable development. Financial performance is measured using commercial banks’ return on assets. Gross domestic product per capita and population are incorporated as control variables. Using a country-level panel of 35 emerging economies over 2015–2021, the study applies the Method of Moments Quantile Regression (MMQR) to detect heterogeneous effects across low-, medium- and high-performing financial systems.
Findings
Digital transformation and institutional quality exert positive effects that strengthen at higher quantiles of financial performance. Renewable energy transition shows positive but more heterogeneous effects. Conventional mean-based estimators conceal important distributional differences, confirming that sustainability-oriented factors do not affect all emerging economies uniformly.
Research limitations/implications
Country-level indicators cannot capture differences between individual banks. Internet use is a broad proxy for digital transformation. The 2015–2021 window is constrained by the availability of the Global Financial Development Database series used for bank return on assets.
Practical implications
Policymakers should differentiate interventions according to a country’s position in the financial-performance distribution. Lower-quantile economies require foundational digital infrastructure and institutional strengthening; higher-quantile economies priorities advanced digital technologies and sophisticated green-finance instruments.
Originality/value
The study moves beyond conventional aggregate ESG scores by examining specific technological, environmental and governance mechanisms and demonstrates that their financial consequences vary across the conditional distribution of performance in emerging economies.
Purpose
This study examines whether digital transformation, renewable energy transition and institutional quality influence financial performance across emerging economies and whether these relationships differ across the conditional distribution of financial performance.
Design/methodology/approach
Drawing on the resource-based view, institutional theory and the technology sustainability perspective, the study conceptualizes digital transformation, renewable energy transition and institutional quality as country-level drivers aligned with the technological, environmental and governance dimensions of sustainable development. Financial performance is measured using commercial banks’ return on assets. Gross domestic product per capita and population are incorporated as control variables. Using a country-level panel of 35 emerging economies over 2015–2021, the study applies the Method of Moments Quantile Regression (MMQR) to detect heterogeneous effects across low-, medium- and high-performing financial systems.
Findings
Digital transformation and institutional quality exert positive effects that strengthen at higher quantiles of financial performance. Renewable energy transition shows positive but more heterogeneous effects. Conventional mean-based estimators conceal important distributional differences, confirming that sustainability-oriented factors do not affect all emerging economies uniformly.
Research limitations/implications
Country-level indicators cannot capture differences between individual banks. Internet use is a broad proxy for digital transformation. The 2015–2021 window is constrained by the availability of the Global Financial Development Database series used for bank return on assets.
Practical implications
Policymakers should differentiate interventions according to a country’s position in the financial-performance distribution. Lower-quantile economies require foundational digital infrastructure and institutional strengthening; higher-quantile economies priorities advanced digital technologies and sophisticated green-finance instruments.
Originality/value
The study moves beyond conventional aggregate ESG scores by examining specific technological, environmental and governance mechanisms and demonstrates that their financial consequences vary across the conditional distribution of performance in emerging economies.