Sustainability in Asia: The Roles of Financial Development in Environmental, Social and Governance (ESG) Performance

Tuan-Hock Ng (), Chun-Teck Lye (), Kar-Hoong Chan (), Ying-Zhee Lim () and Ying-San Lim ()
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Tuan-Hock Ng: Multimedia University
Chun-Teck Lye: Multimedia University
Kar-Hoong Chan: Multimedia University
Ying-Zhee Lim: Multimedia University
Ying-San Lim: Multimedia University

Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, 2020, vol. 150, issue 1, No 2, 17-44

Abstract: Abstract It is increasingly evident that rapid development resulted in habitat loss and environmental degradation. Due mainly to this issue, if unchecked, many countries are susceptible to natural disasters. Financial development has been touted as effective in mitigating environmental risks through its role in providing funds for green technologies development. Nonetheless, evidence regarding the impacts of financial development on environment, social, and governance (ESG) is relatively scant, despite being the central pillars in sustainability management. The main objective of this study is to fill the knowledge gap by examining the connection between financial development and ESG performance in Asia. This study used country-level data for the period between 2013 and 2017. The analyses based on the pooled ordinary least squares technique, the fixed effects regression model, the two-stage least squares method, and the system Generalised Method of Moments estimator show that financial development is positively related to ESG success. Also, additional tests involving the subcomponents of financial sector development (financial markets and financial institutions) show that the finding is consistent and robust under different model specifications. Taken together, financial development is an important catalyst to promote ESG performance in Asia.

Keywords: Financial development; Environment; Social and governance; Panel data; Asia (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (25)

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DOI: 10.1007/s11205-020-02288-w

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