Credit, risk and transparency: how FinTech transforms corporate ESG performance in China

Purpose This research investigates how FinTech influences the ESG (Environmental, Social, Governance) performance of Chinese listed firms through three mechanisms: credit allocation efficiency, corporate risk-taking capacity and earnings management transparency. Design/methodology/approach Using panel data from 22,345 firm-year observations from Shanghai and Shenzhen A-share markets (2011–2020), we employ fixed-effects regressions, instrumental variable estimation and robustness checks, including propensity score matching (PSM). Data are sourced from CSMAR, WIND and Huazheng ESG ratings, using the Peking University Digital Inclusive Finance Index to measure FinTech. Findings FinTech significantly enhances corporate ESG performance through improved credit availability, greater risk-taking capacity for sustainable projects, and reduced earnings management. The effect is stronger for non-state-owned SMEs and firms in less developed financial regions, where FinTech addresses traditional finance gaps. Practical implications Due to stronger effects in less developed regions, regulators should establish “Green FinTech Sandboxes” to foster innovative ESG-focused products. Companies–especially SMEs–should partner with platforms using alternative data (e.g. supply chain scores) to fund sustainability projects. Investors can leverage FinTech adoption to gauge ESG commitment and transparency. Originality/value This study examines how FinTech enhances ESG performance through three key mechanisms: improved credit access, enhanced risk-taking capacity and increased transparency. Using resource-based view and agency theory, we demonstrate that FinTech functions as a strategic resource that reduces information asymmetries and agency costs, particularly in emerging markets.