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Financial Markets and ESG: How Big Data is Transforming Sustainable Investing in Developing countries

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  • A T M Omor Faruq
  • Md Ataur Rahman Chowdhury

Abstract

This study explores the role of big data adoption and financial market development in driving ESG investments in developing countries, using an instrumental variable (IV) approach to address endogeneity. The results show that big data adoption significantly enhances ESG investing, as data-driven analytics improve sustainability assessments and capital allocation. Financial market development also positively influences ESG investments, but its effect is relatively small. A key finding is that inflation negatively impacts ESG investment, highlighting the importance of macroeconomic stability in fostering sustainable finance. In contrast, GDP per capita and foreign direct investment (FDI) are not significant determinants, suggesting that economic growth alone does not drive sustainability efforts. Overall, this study provides empirical evidence that leveraging big data and financial market improvements can accelerate sustainable investing in emerging economies. Policymakers should focus on technological advancements, financial reforms, and inflation control to strengthen ESG investments and long-term sustainability commitments.

Suggested Citation

  • A T M Omor Faruq & Md Ataur Rahman Chowdhury, 2025. "Financial Markets and ESG: How Big Data is Transforming Sustainable Investing in Developing countries," Papers 2503.06696, arXiv.org.
    • Handle: RePEc:arx:papers:2503.06696
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    References listed on IDEAS

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    1. A T M Omor Faruq & Md Toufiqul Huq, 2024. "The Role of Central Banks in Advancing Sustainable Finance," Papers 2411.13576, arXiv.org.
    2. Ummya Salma & Md. Fazlul Huq Khan & Md. Masum Billah, 2023. "Foreign Capital and Economic Growth: Evidence from Bangladesh," Papers 2312.04695, arXiv.org.
    3. Liza Fahmida, 2025. "Evolution of exchange rate regime: Impact of macroeconomy of Bangladesh," Papers 2501.09593, arXiv.org.
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