Financing Sustainable Development: Analysis of Modern Approaches and Practices in the Context of Financial and Credit Activities

Viktoriia Myronchuk, Oleksandr Yatsenko, Dmytro Riznyk, Olena Hurina and Andrii Frolov
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Viktoriia Myronchuk: Department of Banking Finance and Insurance, Vinnytsia Educational and Research Institute of Economics, West Ukrainian National University, Ukraine
Oleksandr Yatsenko: Department of Enterprise Economics, Accounting and Audit, Educational-Scientific Institute of Economics and Law, Bohdan Khmelnytsky Cherkasy National University, Ukraine
Dmytro Riznyk: Department of the Finance, Banking, and Insurance, Ivan Franko National University of Lviv, Ukraine
Olena Hurina: Department of Economics, Management and Financе, V. О. Sukhomlynskyi National University of Mykolaiv, Ukraine
Andrii Frolov: Department of Economic Theory, Kyiv National Economic University named after Vadym Hetman, Ukraine

International Journal of Economics and Financial Issues, 2024, vol. 14, issue 5, 317-329

Abstract: This article explores sustainable development financing, using Monte Carlo simulation to reveal the project’s financial feasibility and possible hazards. To better assist project managers and investors, this study primarily seeks to provide quantitative insights into the profitability and risk profiles of sustainable development projects. Having this knowledge will allow them to make better decisions. In the Best-Case scenario, the average NPV was $250,000, with a standard deviation of $50,000. This demonstrates that, in a perfect world, there is a great deal of opportunity for profit. With a standard deviation of $20,000 and an average NPV of −$50,000, the Worst-Case scenario presents a drastically different picture when confronted with bad conditions. This emphasizes the substantial financial dangers that are there. The Average Case scenario may be the most plausible given its $30,000 standard deviation and $110,000 average NPV. Specifically, the 15% chance of seeing negative NPV outcomes in this scenario emphasizes the inherent dangers. Through sensitivity analysis, we were able to identify operational expenses and revenue streams as the primary factors influencing these financial results. This further emphasizes their importance in determining the success or failure of the project. Sustainable investments can be made more attractive and viable with the help of regulatory frameworks that support them, financial incentives, and risk mitigation strategies like insurance, diversification, and government guarantees. There are already successful examples of the use of green bonds with state guarantees. This is despite the fact that funding sustainable development is full of financial uncertainties. In the end, the financial industry has to change, using new methods and tools to help the world move towards a more sustainable future, as the world community puts more emphasis on sustainability. This study highlights the need of using rigorous analysis and strategic planning to raise funds for sustainable development including green bond and green investors, providing a framework for achieving a balance between financial success and social and environmental responsibility.

Keywords: Green Bonds; Green Investors; Risk Assessment; Renewable Energy; Risk Management; Sustainable Finance (search for similar items in EconPapers)
JEL-codes: G11 G32 Q01 Q56 (search for similar items in EconPapers)
Date: 2024
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