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

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  • Kumar Debasis Dutta
  • Mallika Saha

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.

Suggested Citation

  • Kumar Debasis Dutta & Mallika Saha, 2023. "Role of governance in the nexus between financial development and sustainable development," Journal of International Development, John Wiley & Sons, Ltd., vol. 35(6), pages 1181-1215, August.
    • Handle: RePEc:wly:jintdv:v:35:y:2023:i:6:p:1181-1215
    DOI: 10.1002/jid.3724
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