Embedded Finance in Action: A Pathway to Sustainable Growth

Title

Embedded Finance in Action: A Pathway to Sustainable Growth

Creator

Nag, Arindam

Description

This chapter examines how embedded finance reshapes sustainable investment through AI, machine learning, and DeFi integration with ESG practices. These technologies can address behavioral biases such as loss aversion, yet major challenges remain. ESG data is fragmented, with rating providers often showing correlations below 0.6, weakening automated screening. Greenwashing risks rise as automation favors convenience over impact checks, while regulation lags behind and leaves fiduciary duties unclear. The discussion links these issues to finance theory, applying CAPM to test whether ESG factors improve risk- adjusted returns and using behavioral insights to assess how embedded systems may correct cognitive limits. Case studies show that while embedded finance reduces transaction friction, turning convenience into measurable sustainability outcomes is still uncertain. The chapter contributes by connecting finance theory with emerging technologies to evaluate real versus promised effects on sustainable investment. 2026, IGI Global Scientific Publishing.

Source

Reshaping Financial Systems and Fostering Sustainability Through Embedded Finance;pp.197-226

Date

01-01-2025

Publisher

IGI Global

Coverage

Nag A., Christ University, India

Rights

Restricted Access; Hardcopy may be available in the library

Relation

ISBN: 979-833732466-1; 979-833732464-7;

Format

online

Language

English

Type

Book chapter

Identifier

https://doi.org/10.4018/979-8-3373-2464-7.ch007

https://www.scopus.com/pages/publications/105024840967?origin=resultslist