Providing and Estimating a Human Development Model in Iran with an Emphasis on Green Finance and FinTech Index

Abstract

Objective: This article aims to present and estimate a human development model in Iran, with an emphasis on green finance and the FinTech index. Green finance is recognized as a key strategy in ensuring economic and environmental sustainability, while FinTech can facilitate access to financial resources and improve human development indicators. The primary objective of this study is to examine the impact of these two factors on human development in the period from 1996 to 2022. Methodology: This study is applied and descriptive-analytical, utilizing statistical methods and modeling for data analysis. To measure the green finance index, five economic and environmental variables were employed. The Principal Component Analysis (PCA) method was used to extract the green finance index. Subsequently, the Markov regime-switching approach was applied to estimate the model and analyze the impact of green finance and FinTech on human development. Findings: The results from the Markov model estimation indicate that both green finance and FinTech have a positive and significant impact on human development. During periods of economic growth, employment, education, and capital also contribute to enhancing human development. The coefficients of green finance and FinTech remained positive in both recession and growth regimes, demonstrating their consistent influence on human development across varying economic conditions. Conclusion: This study concludes that green finance and FinTech can effectively promote human development in Iran. Utilizing green financial tools and modern financial technologies, especially during economic downturns, plays a crucial role in improving human development indicators and fostering sustainable economic growth.