The Role of Finance in Promoting Sustainable Development

Abstract

The actual financial crisis put the emphasis in the study of the financial market structure to avoid the international contagion risk or systemic risk. The development of new financial instruments are necessary and the financial innovation is important to promoting the economic growth. In order to design a sustainable finance system it is necessary the consideration of economic fundamentals together with the classical legal figures, because those concepts have the historical data that we could use and put together to promoting sustainable development. In a globalized economic system the design of new financial product must be build up with the development of strong fiscal policies. We can’t ignore that emerging markets in modern times are explained, in part, by the greater similarity between the economic structures in many countries. And now, the emerging economies are better diversified and they engaged in more similar economic activities than they did in the past. The source of systemic risk today is not necessarily the source of systemic risk in the future. The increase in interbank connectivity creates more opportunities for financial development, but as the same time creates more opportunities for systemic risk contagion and transmission in the future.