AI-Powered Sustainable Finance in Emerging Financial Markets: Opportunities, Risks, and Regulatory Challenges
DOI:
https://doi.org/10.51699/cajitmf.v7i4.1326Keywords:
artificial intelligence, sustainable finance, emerging financial markets, ESG analytics, green finance, climate risk, regulatory challenges, financial stabilityAbstract
The integration of artificial intelligence into sustainable finance is becoming an important factor in the transformation of emerging financial markets. While sustainable finance aims to mobilize capital for environmental, social and climate-related objectives, artificial intelligence provides advanced tools for data processing, risk assessment, ESG analysis, investment screening and regulatory supervision. This article examines the opportunities, risks and regulatory challenges associated with AI-powered sustainable finance in emerging financial markets. The study is based on a systematic literature review and conceptual analysis of academic publications, policy reports and institutional documents related to artificial intelligence in finance, ESG analytics, climate finance, financial stability and regulatory governance. The findings show that AI can support sustainable finance through improved ESG data analytics, climate-risk modelling, green investment screening, sustainable lending, fraud detection and financial inclusion. However, the adoption of AI also creates significant risks, including algorithmic bias, low data quality, model opacity, cybersecurity threats, greenwashing, regulatory lag and unequal access to digital financial infrastructure. The article proposes a conceptual framework linking AI tools, sustainable finance functions, expected benefits, potential risks and regulatory responses. The study concludes that AI-powered sustainable finance can contribute to sustainable development in emerging financial markets only if it is supported by transparent data governance, explainable AI models, cybersecurity standards, ethical principles and adaptive regulation.
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