Role of governance in the nexus between financial development and sustainable development

Kumar Debasis Dutta and Mallika Saha

Journal of International Development, 2023, vol. 35, issue 6, 1181-1215

Abstract: Financial development (FD), by supporting financial inclusion, economic growth and green innovation, kindles sustainable development (SD), though unbridled FD without governance can fuel unsustainable activities. Therefore, we aim to estimate the role of governance (CG) in the FD–SD nexus for a panel of 128 countries covering the period 1995–2017 using advanced econometric methods. Results infer that FD beyond certain level may hamper SD, while governance always encourages SD. Besides, their confluence has substitutive effects, especially in high‐income countries, yet it is crucial for sustainability. These insights are useful for policymakers to develop appropriate FD, governance and SD strategies.

Date: 2023
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https://doi.org/10.1002/jid.3724

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Persistent link: https://EconPapers.repec.org/RePEc:wly:jintdv:v:35:y:2023:i:6:p:1181-1215

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