ESG and the Capital Market: How AI is Changing Sustainable Investing in South Asian Developing Nations

Diksha Dubey Jaroliya (), Suyog Chachad, Pavan Mishra and Neha Shrivastav
Additional contact information
Diksha Dubey Jaroliya: ISB&M
Suyog Chachad: ISB&M
Pavan Mishra: UTD Barkatullah University
Neha Shrivastav: CRIM Barkatullah University

A chapter in Proceedings of the International Conference on Artificial Intelligence in Management for Business and Industrial Growth (AIMBIG 2025), 2025, pp 132-143 from Springer

Abstract: Abstract The current chapter tries to investigate how the integration of Artificial Intelligence (AI) and the development of financial markets contribute to the growth of Environmental, Social, and Governance (henceforth called ESG) investing in South Asian developing countries. Utilizing an instrumental variable approach for mitigating endogeneity concerns, analysis reveals that AI-driven data infrastructure plays a pivotal role in advancing ESG-focused capital allocation. The adoption of AI technologies; particularly in processing large datasets; significantly enhances sustainability evaluations, enabling more accurate and timely investment decisions. On the other hand, financial market development demonstrates a slight positive correlation with the worldwide activity of ESG investments. While more developed markets provide improved platforms for ESG-related instruments, their impact is not as substantial as AI-based data systems in driving sustainable finance. An important macroeconomic insight from the study is the inverse relationship between inflation and ESG investment levels. Elevated inflation rates appear to undermine investor confidence and divert capital away from long-term sustainable initiatives. Conversely, traditional macroeconomic indicators show no statistically significant effect on ESG investment, implying that economic growth alone is insufficient to propel sustainability objectives. The findings suggest that emerging economies can stimulate ESG investment by embracing AI technologies, enhancing financial market frameworks, and maintaining macroeconomic stability. Policymakers are encouraged to prioritize digital innovation, regulatory reforms, and inflation management to create a conducive environment for sustainable finance.

Keywords: ESG; FDI; Macroeconomic factors; AI; GDP (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-898-1_11

Ordering information: This item can be ordered from
http://www.springer.com/9789464638981

DOI: 10.2991/978-94-6463-898-1_11

Access Statistics for this chapter

More chapters in Advances in Economics, Business and Management Research from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().