IDEAS home Printed from https://ideas.repec.org/a/spr/minecn/v38y2025i2d10.1007_s13563-025-00493-y.html
   My bibliography  Save this article

Financial risk, sustainable development, natural resources and green finance: unveiling the shadow economy in the BRICST countries

Author

Listed:
  • Faisal Faisal

    (Sohar University
    World Peace University)

  • Aliya Zhakanova Isiksal

    (Near East University)

  • Ala Fathi Assi

    (Near East University)

  • Adnan Ali

    (Sohar University)

  • Hamid Ghazi H Sulimany

    (Taif University)

Abstract

Natural resources and green finance play a vital role in the sustainability of any economy. However, emerging economies are confronted with the problems of the informal economy and financial risk, which creates uncertainty. Therefore, this study investigates the question regarding whether green finance can mitigate the informal or shadow economy. Simultaneously, the interaction role of green finance and financial risk is analysed to predict whether green finance moderates the financial risk in influencing the shadow economy. Therefore, the existing study aims to address the research question by investigating the nexus between green finance, financial risk, natural resource rents, sustainable development, and the informal economy in the BRICST countries during the 2004–2018 period. This study employs the Lagrange multiplier unit root test in addition to Pedroni and Kao cointegration tests to predict the integration order and long-run nexus. Moreover, the FMOLS, DOLS, and Konya bootstrap causality techniques are applied. The long-run nexus has been confirmed with a unique order of integration of the series. Moreover, the FMOLS results suggest that natural resources, green finance, sustainable development and GDP decrease the informal economy, while financial risk causes it to upsurge. This is because green finance investment leverages the economies by using legal channels that restrict the use of the informal economy. Moreover, the moderating effect of green finance through the channel of financial risk positively affects the informal economy. Finally, a bidirectional causality has been found between green finance and the informal economy for India and South Africa. It is suggested that the BRICST economies should focus on increasing investment in the green finance sector by stabilizing the financial risk to decrease the size of the informal economy. The BRICST economies must leverage investments in the natural resources sector, which can also reduce the informal economy.

Suggested Citation

  • Faisal Faisal & Aliya Zhakanova Isiksal & Ala Fathi Assi & Adnan Ali & Hamid Ghazi H Sulimany, 2025. "Financial risk, sustainable development, natural resources and green finance: unveiling the shadow economy in the BRICST countries," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 38(2), pages 397-412, June.
    • Handle: RePEc:spr:minecn:v:38:y:2025:i:2:d:10.1007_s13563-025-00493-y
    DOI: 10.1007/s13563-025-00493-y
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s13563-025-00493-y
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s13563-025-00493-y?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:minecn:v:38:y:2025:i:2:d:10.1007_s13563-025-00493-y. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.