Article Sidebar

Download
PDF
Statistic
Read Counter : 252 Download : 145

Main Article Content

Abstract

Purpose: This study investigates the interplay between financial markets and sustainable economic development, aiming to clarify how financial activities influence sustainability goals and vice versa.


Research Design and Methodology: The research utilizes a multidisciplinary approach, drawing insights from economics, finance, environmental studies, sociology, and political science. A comprehensive literature review was conducted to synthesize existing knowledge and identify research gaps, focusing on theoretical and empirical studies without primary data collection.


Findings and Discussion: Findings reveal that financial markets are crucial for capital allocation and resource mobilization but can also lead to environmental degradation, social inequality, and systemic risks. The study emphasizes the significant role of regulatory frameworks and institutional arrangements in determining how financial markets affect sustainability outcomes, highlighting the need for integrated reforms, regulatory measures, and stakeholder collaboration.


Implications: The study underscores the importance of aligning financial incentives with sustainability objectives and enhancing the resilience of financial systems. It calls for stronger partnerships among stakeholders and suggests that further research is needed to explore innovative financial mechanisms that promote sustainable development and assess the long-term impacts of financial practices on sustainability. These insights are valuable for policymakers, practitioners, and scholars navigating the finance-sustainability nexus.

Keywords

Financial Markets Sustainable Economic Development Regulatory Frameworks Environmental Sustainability Stakeholder Engagement

Article Details

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

How to Cite
Maharajabdinul, M. (2024). Understanding the Linkages Between Financial Markets and Sustainable Economic Development. Advances in Economics & Financial Studies, 2(2), 76–87. https://doi.org/10.60079/aefs.v2i2.282
Download Citation
Endnote/Zotero/Mendeley (RIS)
BibTeX

References

  1. Adrian, T., & Shin, H. S. (2010). Liquidity and leverage. Journal of Financial Intermediation, 19(3), 418-437. https://doi.org/10.1016/j.jfi.2010.04.003
  2. Aizenman, J., & Binici, M. (2016). Exchange market pressure in OECD and emerging economies: Domestic vs. external factors and capital flows in the old and new normal (NBER Working Paper No. 22605). National Bureau of Economic Research. https://doi.org/10.3386/w22605
  3. Amidu, M. (2018). Financial market development and economic growth in Ghana: Does the measure of financial development matter? Cogent Economics & Finance, 6(1), 1484968. https://doi.org/10.1080/23322039.2018.1484968
  4. Arestis, P., & Sawyer, M. (2014). The economic crisis in Europe: What shall we do? Edward Elgar Publishing.
  5. Batten, J., & Vo, X. V. (2019). Finance-growth nexus: Evidence from the OECD and non-OECD countries. Research in International Business and Finance, 47, 19-29. https://doi.org/10.1016/j.ribaf.2018.07.011
  6. Bauer, R., Koedijk, K., & Otten, R. (2020). International evidence on ESG investing: The role of institutional factors. Journal of Corporate Finance, 65, 101819. https://doi.org/10.1016/j.jcorpfin.2020.101819
  7. Beck, T., Demirgüç-Kunt, A., & Levine, R. (2007). Finance, inequality, and poverty: Cross-country evidence. Journal of Economic Growth, 12(1), 27-49. https://doi.org/10.1007/s10887-006-9005-5
  8. Biais, B., Rochet, J. C., & Woolley, P. (2010). Innovation, rents, and risk. Journal of Financial Intermediation, 19(3), 274-299. https://doi.org/10.1016/j.jfi.2010.01.003
  9. Borio, C. (2014). The financial cycle and macroeconomics: What have we learned? Journal of Banking & Finance, 45, 182-198. https://doi.org/10.1016/j.jbankfin.2014.01.015
  10. Brunnermeier, M. K., & Sannikov, Y. (2014). A macroeconomic model with a financial sector. American Economic Review, 104(2), 379-421. https://doi.org/10.1257/aer.104.2.379
  11. Carney, M. (2015). Breaking the tragedy of the horizon—Climate change and financial stability. Speech at Lloyd's of London. Bank of England. https://www.bankofengland.co.uk/speech/2015/breaking-the-tragedy-of-the-horizon-climate-change-and-financial-stability
  12. Claessens, S., Dell'Ariccia, G., & Igan, D. (2010). Cross-country experiences and policy implications from the global financial crisis. Economic Policy, 25(62), 267-293. https://doi.org/10.1111/j.1468-0327.2010.00241.x
  13. Clark, G. (2020). Inclusive finance and poverty reduction: Evidence from emerging economies. Journal of Financial Economic Policy, 12(4), 565-583. https://doi.org/10.1108/JFEP-05-2019-0064
  14. Cull, R., Demirgüç-Kunt, A., & Morduch, J. (2018). Financial inclusion and inclusive growth: A review of recent empirical evidence. Journal of Economic Surveys, 32(3), 804-827. https://doi.org/10.1111/joes.12259
  15. De Moor, L., & Dürr, E. (2021). Regulating the global financial market: Challenges and prospects. Edward Elgar Publishing.
  16. Demirgüç-Kunt, A., & Levine, R. (2019). Finance, growth, and financial sector structure. Handbook of Economic Growth, 2, 169-276. https://doi.org/10.1016/B978-0-444-53540-5.00003-2
  17. Demirgüç-Kunt, A., Huizinga, H., & Laeven, L. (2013). The impact of systemic banking crises on financial markets. Journal of Financial Economics, 113(1), 1-17. https://doi.org/10.1016/j.jfineco.2013.05.006
  18. Dietz, S., Ostrom, E., & Stern, P. C. (2003). The struggle to govern the commons. Science, 302(5652), 1907-1912. https://doi.org/10.1126/science.1091015
  19. Eccles, R. G., Ioannou, I., & Serafeim, G. (2011). The impact of corporate sustainability on organizational processes and performance. Management Science, 59(5), 1045-1061. https://doi.org/10.1287/mnsc.1110.1336
  20. Empirical investigation. American Economic Review, 91(5), 1369-1401. https://doi.org/10.1257/aer.91.5.1369
  21. European Commission. (2020). EU Emissions Trading System (EU ETS). https://ec.europa.eu/clima/policies/ets_en
  22. Friedman, M., & O'Brien, T. L. (2017). Capitalism and freedom. University of Chicago Press.
  23. Gao, Y. (2022). The relationship between financial development and sustainable economic growth: Evidence from China. Sustainability, 14(4), 2170. https://doi.org/10.3390/su14042170
  24. Hassan, T. A., Hollander, S., van Lent, L., & Tahoun, A. (2020). Firm-level political risk: Measurement and effects. The Quarterly Journal of Economics, 135(1), 61-118. https://doi.org/10.1093/qje/qjaa025
  25. Jackson, T., & Apostolakis, G. (2020). Financial markets and sustainability: A synthesis. Sustainability Accounting, Management and Policy Journal, 11(4), 841-865. https://doi.org/10.1108/SAMPJ-10-2019-0333
  26. Kose, M. A., Prasad, E. S., & Terrones, M. E. (2006). How do trade and financial integration affect the relationship between growth and volatility? Journal of International Economics, 69(1), 176-202. https://doi.org/10.1016/j.jinteco.2005.05.002
  27. Lounsbury, M., & Hirsch, P. M. (2010). Markets on trial: The economic sociology of the US financial crisis. Research in the Sociology of Organizations, 31, 3-37. https://doi.org/10.1108/S0733-558X(2010)0000031002
  28. Lounsbury, M., & Hirsch, P. M. (2010). Markets on trial: The economic sociology of the U.S. financial crisis: Part A. Emerald Group Publishing Limited.
  29. Margolis, J. D., Elfenbein, H. A., & Walsh, J. P. (2009). Does it pay to be good? A meta-analysis and redirection of research on the relationship between corporate social and financial performance. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.1533216
  30. Merton, R. C. (1992). Financial innovation and economic performance. Journal of Applied Corporate Finance, 4(4), 12-22. https://doi.org/10.1111/j.1745-6622.1992.tb00326.x
  31. Mishkin, F. S. (2011). Over the cliff: From the subprime to the global financial crisis. Journal of Economic Perspectives, 25(1), 49-70. https://doi.org/10.1257/jep.25.1.49
  32. OECD. (2020). Enhancing the contributions of institutional investors to the transition to a low-carbon economy. OECD Publishing. https://doi.org/10.1787/9789264163787-en
  33. Oskonbaeva, Z. (2018). The relationship between financial development and sustainable economic growth: Evidence from Kyrgyzstan. Economic Research-Ekonomska Istraživanja, 31(1), 1737-1751. https://doi.org/10.1080/1331677X.2018.1430053
  34. Setiawan, R. (2021). The impact of financial market development on economic growth in Indonesia. Brawijaya Law Journal, 2(2), 218-231. https://doi.org/10.21776/ub.blj.2021.002.02.7
  35. Sikorska-Simmons, E., & Kozlowski, A. (2016). Understanding the link between financial markets and sustainability: A review of empirical studies. Journal of Environmental Management, 181, 563-574. https://doi.org/10.1016/j.jenvman.2016.07.056
  36. UN. (2015). Transforming our world: The 2030 agenda for sustainable development. United Nations. https://sdgs.un.org/2030agenda
  37. UNCTAD. (2021). Trade and development report 2021: Beyond recovery—Towards a new development agenda. United Nations. https://unctad.org/system/files/official-document/tdr2021_en.pdf
  38. UNEP. (2019). Global financial markets and environmental sustainability: Towards a research agenda. United Nations Environment Programme. https://wedocs.unep.org/bitstream/handle/20.500.11822/28829/Global_financial_markets_and_environmental_sustainability_Towards_a_research_agenda.pdf
  39. World Bank. (2020). World development report 2020: Trading for development in the age of global value chains. World Bank. https://openknowledge.worldbank.org/handle/10986/32437