Is financial development crucial to achieving the “2030 agenda of sustainable development”? Evidence from Asian countries

Abstract

PurposeAchieving sustainable development goals (SDGs) demands mobilising finance and aligning it with elements of sustainability. This study, thus, aims to investigate the impact of financial development of an economy on the achievement of SDGs.Design/methodology/approachThe authors analyse a sample of 35 Asian countries based on their SDG trends and representative SDG indicators. An ordered probit model is employed for analysing the impact of financial development on the SDG trend. Subsequently, pairwise Granger causality test is employed for investigating the causality between the SDG and the financial development.FindingsThe findings indicate that financial development positively impacts the progress towards SDG achievement in the areas: (1) gender equality, (2) economic growth, (3) industry, innovation and infrastructure and (4) sustainable cities and communities; and adversely impacts the climate action. The causality test indicates a bidirectional causality for financial development and industry, infrastructure and innovation, financial development and sustainable cities and communities and financial development and climate action, and unidirectional causality from gender equality to financial development.Research limitations/implicationsThe findings have implications for the government of a nation as well as the private businesses. The goals allow businesses to implement well-articulated strategies which pay attention to the SDGs.Originality/valueThe novelty of the paper is that the authors provide evidence supporting the view that focusing on building a resilient and robust financial system is of importance for the achievement of SDGs.