Sustainable Financial Services Research Articles

The Effect of Corporate Social Responsibility (CSR) on Financial Performance

Himbara Bank has a very significant role in driving economic growth, managing national assets, and providing sustainable financial services to the community. However, its role is not only limited to financial aspects but also holds social responsibility towards society and the environment. Therefore, it is important to understand the extent to which CSR can influence Bank Himbara's financial performance in this dynamic business environment. This research aims to find information on the effect of implementing Corporate Social Responsibility (CSR) on financial performance based on Return on Equity (ROE). In this research, the population used is banks included in the Association of State-Owned Banks (Himbara) for 2019-2022. The data analysis techniques used are descriptive statistical analysis and panel data regression analysis. Based on research results, Corporate Social Responsibility (CSR) did not have a significant effect on Return on Equity (ROE) in the Association of State-Owned Banks (Himbara) in 2019-2022.

The evolution of green fintech: Leveraging AI and IoT for sustainable financial services and smart contract implementation

The convergence of financial technology and sustainability has given rise to green fintech, an innovative field leveraging cutting-edge technologies to address environmental challenges through financial solutions. This review explores the evolution of green fintech, focusing on the transformative roles of Artificial Intelligence (AI), Internet of Things (IoT), and smart contracts in developing sustainable financial services. Through a comprehensive analysis of recent literature and case studies, we examine how AI enhances ESG assessments, enables data-driven sustainable investment strategies, and facilitates green lending practices. We investigate IoT applications in environmental monitoring, supply chain transparency, and smart grid integration, highlighting their contributions to sustainable finance. The implementation of smart contracts for sustainability is explored, discussing their potential in green bonds, carbon credit trading, and renewable energy markets. The paper addresses key challenges facing green fintech, including data quality issues, privacy concerns, and regulatory uncertainties, proposing future directions for research and development. Our findings suggest that the integration of AI, IoT, and smart contracts in green fintech has significant potential to accelerate the transition to a sustainable global economy by embedding environmental considerations into financial decision-making at all levels. This article contributes to the growing body of literature on sustainable finance, providing insights for practitioners, policymakers, and researchers. It underscores the need for a multidisciplinary approach to overcome technological, regulatory, and socio-economic barriers, paving the way for a more sustainable and technologically advanced financial ecosystem.

Constraints to agricultural finance in underdeveloped and developing countries: a systematic literature review

ABSTRACT Agricultural finance plays a pivotal role in facilitating the modernization and commercialization of farming practices and bolstering global food security. However, the provision of sustainable financial services in remote regions poses a significant challenge within the developing and underdeveloped countries. Consequently, farmers often grapple with inadequate access to formal credit sources and essential productive assets due to diverse constraints. Although, several studies have investigated constraints to agriculture finance; the literature is divergent and a holistic framework of constraints to agriculture finance is missing. Therefore, this research explores the constraints to agriculture finance in 31 developing and underdeveloped countries using systematic review approach, and synthesizes a holistic framework of the constraints using Qualitative Evidence Synthesis (QES) method that can be used as dependable framework for conceptualization and policy formation. Moreover, it describes the interplay and mutual reinforcement between the challenges faced by different stakeholders to elaborate how they influence each other in complex ways. Additionally, this study suggests a collective and multi-faceted approach for overcoming barriers to agricultural financing, and highlights the limitations and unintended consequences of agricultural credit and its implications for agricultural sustainability.

Research Trends in Digital Financial Inclusion: A Bibliometric Analysis using VOSviewer

Digital financial inclusion (DFI) aims to provide affordable and sustainable financial services to financially excluded and underserved populations through cost-saving digital means. The purpose of the study is to conduct a bibliometric analysis of DFI using VOSviewer software. A bibliometric and descriptive quantitative approach was employed. Data was collected based on the keyword "digital financial inclusion" from Google Scholar. From the search results, 982 articles published between 2018 and 2023 were found, with 125 relevant to the topic. The number of DFI publications increased from 7 in 2018 to 18 in 2019, indicating a growing interest. The number remained stable in 2020 and 2021, but there was a significant surge in research interest in 2022 with 37 publications. This study demonstrates the relevance of bibliometric analysis, particularly in the field of DFI. The findings are essential for policymakers, researchers, and practitioners to determine the novelty and quantity of data.

Non-linear dynamics in finance–inequality nexus: time series evidence from the Indian economy

PurposeThe principal aim of this study is to examine the relationship between financial development and income inequality in India using the financial Kuznets curve (FKC) hypothesis.Design/methodology/approachThis study uses the autoregressive distributed lag (ARDL) model and the Toda–-Yamamoto causality test to investigate the long-run and short-run relationship and causality between financial development and income inequality. In addition, this study employs a principal component analysis (PCA) to construct a comprehensive financial development index.FindingsThe study found a long-run relationship between financial development and income inequality in India for the period under consideration. Trade is found to improve the income distribution, while inflation worsens income distribution. Moreover, the empirical results revealed a feedback causality between financial development and income inequality. The study results confirm an inverted U-shaped relationship between financial sector development indicators and income inequality, thus validating the FKC hypothesis for the Indian economy.Research limitations/implicationsThe study draws attention of the government and policymakers, urging them to focus on building a strong financial sector by improving its efficiency. This, in turn, will lead to enhanced financial stability and a reduction in income inequality. They should prioritise the development of high-quality and sustainable financial products and services to ensure the robust growth of the financial sector.Originality/valueTo the best of our knowledge, this study is the latest of its kind to empirically test the financial development on income inequality and the FKC hypothesis simultaneously for the Indian economy using financial proxy variables from financial institutions (FIs) and financial markets (FMs) for the measurement of financial depth.

Financial Deepening & Income Inequality: Evidence From Indonesia

Financial deepening is a term used to measure the quality of improvement in the provision of financial services. Financial deepening can be seen as one of the factors affecting income inequality. The focus of financial deepening in this research using a credit ratio is a ratio of total credit released by commercial banks in each province compared to the province’s GDP and the bank ratio is the ratio of the number of bank branches per million population of the province. The discussion of this research is limited to using country data from 34 provinces in Indonesia from 2005-2021. The results show that the various indicators that measure financial deepening have an impact on increasing inequality during the observation period. This condition shows that financial services, especially banking access through the ratio of the number of banks and also the development of the credit ratio, have not been able to reduce income inequality. The government needs to evaluate policies and improve the quality of sustainable financial services to achieve a more even distribution of income so that income inequality can be reduced.

Sustainable financial services as a tool for sustainable economic development

The author reviewed the essence and role of sustainable financial services, emphasised the main aspects of the introduction of sustainable financial services, and provided a chronology of the introduction of global climate initiatives. Due to the fact that in many countries the level of development of “green” finance is still relatively low and further development requires efforts at the level of governments, financial institutions, investors and the public, the author emphasises the need to focus on promoting the development of a sustainable financial system, which will further contribute to solving environmental problems and achieving sustainable development goals. The author also touched upon the factors that influence the degree of development of “green” finance in different countries of the world and noted that in developed and developing countries there is a striking contrast in the use of “green” financial instruments and it is natural. It is undeniable that “green” financial instruments are a significant help in solving the problem of concentration of financial resources for active implementation of green economy principles. Consequently, governments are taking all measures to stimulate green capital to accelerate the achievement of sustainable development goals.

Research on the Impact of Digital Finance on China's Urban-Rural Income Gap

<p>The integration of digital technology and traditional finance has further achieved the goal of low-cost and sustainable financial services and contributed to high-quality economic development. Based on the data from 31 provinces in China from 2011 to 2021, this paper empirically analyzes the impact of digital finance on the urban-rural income gap. The results show that digital finance can significantly narrow the income gap between urban and rural residents. The quantile test shows that the greater the urban-rural income gap, the stronger the role of digital finance in narrowing the urban-rural income gap. The threshold effect test shows that the narrowing effect of digital finance on the urban-rural income gap will first increase and then weaken with the continuous improvement of the development level. Heterogeneity analysis shows that the secondary indicators of digital finance can significantly narrow the urban-rural income gap, and the effect of depth of usage is the most obvious. Moreover, digital finance has a significantly stronger effect on narrowing the urban-rural income gap in the eastern region than in other regions. Therefore, we should vigorously promote the development of digital finance and give full play to its effectiveness in narrowing the urban-rural income gap.</p>

Determinants of Financial Inclusion in Small and Medium Enterprises: Empirical Evidence from Afghanistan

This study examines the determinant factors that influence financial inclusion among small and medium enterprises (SMEs) in Afghanistan. The study uses quantitative methodology with primary sources of data. More specifically, the study adopts a multiple linear regression model. The finding of the study reveals that; supply-side factors, demand-side factors, market opportunity, institutional framework factors, costs of borrowing, and collateral requirements have a positive effect on the firm’s access to finance. This study suggests concerned bodies sustain rapid and inclusive economic growth and hence eradicate extreme poverty and hunger, the policymakers must build an efficient, strong, and well-functioning financial market system that provides affordable and sustainable financial services to SMEs.

Determinants of Financial Inclusion in Small and Medium Enterprises: Empirical Evidence from Afghanistan

This study examines the determinant factors that influence financial inclusion among small and medium enterprises (SMEs) in Afghanistan. The study uses quantitative methodology with primary sources of data. More specifically, the study adopts a multiple linear regression model. The finding of the study reveals that; supply-side factors, demand-side factors, market opportunity, institutional framework factors, costs of borrowing, and collateral requirements have a positive effect on the firm’s access to finance. This study suggests concerned bodies sustain rapid and inclusive economic growth and hence eradicate extreme poverty and hunger, the policymakers must build an efficient, strong, and well-functioning financial market system that provides affordable and sustainable financial services to SMEs.

Correction to: Sustainable financial services: reflection and future perspectives

Correction to: Sustainable financial services: reflection and future perspectives

Sustainable financial services: reflection and future perspectives

Sustainability transformations in global financial services aimed at addressing sustainability-related risks have been long overdue and are critical for the future development of financial services. The call for sustainability transformations in financial services arose out of the Paris Agreement and the UN Sustainable Development Goal agenda. The financial services sector plays an important role in providing sustainable financial services to nudge sustainability practices among firms and consumers around the world. However, efforts for sustainability transformations among financial service providers are still slow, and little research has been documented in this area. So far, no bibliometric analysis has been conducted in this area as well. Therefore, this research undertakes a comprehensive snooping review of extant sustainable financial services research in order to establish a trend of existing financial services sustainability activities to enhance future research possibilities. Our comprehensive review of the Scopus database was guided by the PRISMA protocols, including PRISMA-P and SPAR-4-SLR. Bibliometric and content analysis approaches were also employed as analytical tools within an analytical framework. This study has also employed Microsoft Excel and the VOSviewer tool in conducting performance and science mapping analyses. After article filtering for “sustainability” was conducted, a total of 103 research documents published between 1991 and 2022 were identified as usable samples, which were critically reviewed and analyzed in this study by means of content analysis. Three major themes were investigated, including—sustainable financial products, sustainable financial services delivery, and sustainable financial services marketing strategies. Our findings show a recent growth in academic publications in the area, but also indicate relatively low financial sustainability activities around the world. This research therefore aims to provide present and future innovative insights on sustainable financial services aimed at stimulating more financial institutions, financial service managers, policy makers, and academic researchers to take more action toward greater sustainability development activities in the financial services sector.

Promoting Sustainable Financial Services Through the Adoption of eWallet Among Malaysian Working Adults

This study investigated the effect of perceived usefulness, perceived ease of use, social influence, facilitating conditions, compatibility, and perceived trust on the intention and adoption of electronic wallet (eWallet) among working adults in Malaysia. The cross-sectional research design was adopted to gather quantitative data from 1,156 working adults via Google form link shared across the social media platform. The collected data were analyzed with partial least square structural equation modeling (PLS-SEM) tool using SmartPLS 3.1. The study outcomes revealed that perceived usefulness, perceived ease of use, facilitating conditions, compatibility, and perceived trust displayed significantly positive effect on both the intention to use and the adoption of eWallet. Additionally, the intention to use eWallet mediated the relationships of perceived usefulness, perceived ease of use, social influence, facilitating conditions, compatibility, and perceived trust with adoption to use eWallet. Household income significantly moderated the relationship between compatibility and intention to use eWallet. eWallet service providers and financial development policy making in Malaysia should focus on promoting the application of eWallet to uplift its social influence, besides enhancing consumer security to harness the adoption of eWallet amidst the public. Essentially, the intention-behavior gap needs to be bridged by exploring new factors that can affect the behavior.

Does financial inclusion induce poverty, income inequality, and financial stability: empirical evidence from the 54 African countries?

PurposeThe aim of the study is to examine the impact of financial inclusion on poverty, income inequality and financial stability using panel data of 54 African countries.Design/methodology/approachTo achieve this objective, the current study used multiple regressions across an unbalanced panel data of 54 African countries which are based on the four years mean value for the period 2001–2019.FindingsThe results show that financial inclusion (FI) is a valuable indicator; it reduces poverty, income inequality and improves financial stability.Research limitations/implicationsThe study invokes the attention of government and policymakers to build up a financially inclusive system which, in turn, leads to improve financial stability and lower poverty and income inequality. They should focus on quality and sustainable financial products and services in terms of financial inclusion to avoid dominant accounts and ensure consumer protection.Originality/valueThis adds to the scarce literature on the impact of financial inclusion on poverty, income inequality and financial stability in the context of African countries. The study contributes to the literature on the issue of financial inclusion and poverty, income inequality and financial stability by reconfirming (or otherwise) findings of previous studies.

Analyzing the Impacts of Financial Services Regulation to Make the Case That Buy-Now-Pay-Later Regulation Is Failing

Fee-based Buy-Now-Pay-Later services (BNPL) are becoming widely adopted in many developed countries, including Australia. Across a variety of regulatory approaches there appears to be relatively minimal regulatory coverage of fee-based BNPL. This review applies a results-oriented, behaviourally informed market failure approach to assess the regulatory outcomes of fee-based BNPL. The review makes the case that the impacts of the regulation of fee-based BNPL in Australia demonstrate multiple forms of regulatory failure. The regulatory failure is particularly due to regulatory capture at a broad level and especially in terms of a lack of consumer protections. Consumers may particularly need consideration and protection because understanding the increasing complexity and financial knowledge at the heart of many fintech services is beyond the capability or responsibility of the consumer. Incorporating social and consumer considerations into analyses of regulatory structures can enable analyses of the regulation of fintech and move financial services regulation toward providing more socially useful and sustainable financial services. In the future, a behaviourally informed approach to the regulation of fintech may be beneficial and enhance sustainability.

The Financial Development-Environmental Degradation Nexus in Bangladesh: A Long-Run Co-Integration Approach

Using annual time series data from 1983 to 2019, this study examines the impact of economic growth, exports, energy consumption, and financial development on environmental deterioration in Bangladesh. The long-run cointegration of variables is investigated using Dynamic Ordinary Least Squares (DOLS) and Fully Modified OLS (FMOLS) approaches. The co-integration study demonstrates a long-term relationship between dependent variable and independent variables. The findings reveal that in the long run the primary determinants of carbon dioxide emissions are economic growth, energy consumption, export, and financial development are the primary determinants of carbon dioxide emissions. Except for energy consumption, the result shows that financial development, economic development, and export have a statistically significant long-run co-integration with environmental degradation (CO2 emissions and ecological footprint). The Environmental Kuznets Curve, a quadratic term for economic expansion, demonstrates a negative impact on environmental degradation (EKC). The key findings show and emphasize the need for sound policies for more equal economic and financial growth, as well as, environmentally sustainable financial services. According to the findings, the government should prioritize programs that reduce carbon dioxide emissions by strengthening the financial sectors. Also government should consider the role it plays in slowing environmental degradation and hence, directly enhancing environmental quality in Bangladesh.

Microfinance and poverty reduction: New evidence from Pakistan

AbstractMicrofinance is key to reducing poverty in Pakistan. While comprehensive finance is frequently considered as, it creates inclusive growth and poverty reduction in poor communities, and can be boosted by ease of finance. However, when the poor people are involved in the broader scale (different types of poverty level), can this microfinance work? We used an econometric model to test the symmetry approaches of the comprehensive financial organizations and the poor in poverty reduction activities to find the answers. Keeping this in view, we studied different determinants related borrowers for the poverty reduction with respect to access to Micro finance institutes (MFI) and productive loan. Despite some limitations, such as those arising from potential unobservable important determinants of access to MFIs, significant positive effect of MFI productive loans has been confirmed. The significance of “treatment effect” of coefficients has been verified by probit model. In addition, we found that loans for productive purposes were more important for poverty reduction by MFB (Microfinance banks) than MFI. However, in urban areas, simple access to MFIs has larger average poverty‐reducing effects than the access to loans from MFIs for productive purposes. This leads to exploring service delivery opportunities that provide an additional avenue to monitor the usage of loans to enhance the outreach. Therefore, the results showed by probit model that access to MFI was better in urban areas and male borrowers thus achieved more loan. Therefore, it is suggested that for the poverty reduction, there is a dire need to improve and localize the Microfinance institutions in rural areas as well as to promote group lending methodology to avoid risk of getting loans and increase the number of both male and female savers. Thus, the saving value will be increased and side by side interest rate will be significantly achieved. Hence, it is concluded that the goal of providing sustainable financial services implicitly implies that MFIs provide financial services to the poor, whenever they find it profitable to do so. The removal of subsidy and the absence of interest rate restrictions could make the market for the poor become even worse as the market occupiers may act in their own interest. The powerful push will be needed from national economic and social impacts for the increasing support for microfinance.

Rural Financing as a Panacea for Poverty Alleviation: A Study of Selected Micro and Small Enterprises in Ogun State

Economic reforms have been implemented in Nigeria since 1980s which essentially entailed the shift from an administratively managed and public sector led economy to a market oriented and private sector led economy. Financial sector reforms were part of these broader economic reforms. A successful financial sector reform was expected to generate a dynamic process involving substantial changes in the country’s real activities of production, exchange (trade) and finance. Sustainability of the reforms was expected to result in financial deepening, increase in the range of financial products in order to better serve the needs of the economy and enhance transformation of the economy (urban as well as rural) so that production, exchange and other economic activities take place in different ways and in the context of new or reformed institutions. However the progress being made as a result of financial sector reform, financial services to the rural population have been slow to develop. The financial sector reforms are still in progress, but there is increasing concern that the majority of the rural population which constitutes 70-80% of the population and comprise 90% of all the poor in Nigeria have not benefited from the financial reforms. They have largely been bypassed by these reforms. The need to enhance accessibility of financial services to the rural poor in Nigeria deserves high priority on the agenda of the on-going financial sector reforms. In recognition of the need for improving access to financial services by the rural population, this paper will address the experience and lessons learned to date in the development of rural finance with a view to facilitating appropriate design of rural finance and develop sustainable financial services for the needs of rural population in Nigeria, in order to reduce the increasing rate of poverty. The survey research design was adopted and data collected through questionnaires. The impact of rural financing as a panacea for poverty reduction in Nigeria was analyzed using the OLS regression method. The study revealed the existence of positive relationship between rural financing and poverty reduction in Nigeria. The study recommended that adequate measure must put in place to continue encouragement of rural financing in Nigeria.

Financial Inclusion: A Veritable Tool For Inclusive Growth And Poverty Alleviation In Nigeria

In recent times, inclusive growth has become a national policy objective worldwide. In the context of Nigeria’s growth planning, it is a relatively new terminology which got the attention of policy makers in October 2012.Inclusive growth has the literal meaning of the two words that refers to both the pace and the pattern of the economic growth. It basically means, broad based, shared, and pro-poor growth. In Nigeria, the formal financial system provides services to about 35% of the economically active population while the remaining 65% are excluded from access to financial services. These 65% are often served by the informal financial sector some of which are not regulated. The non-regulation of the activities of the informal sector has serious implications for the Central Bank of Nigeria’s ability to exercise its mandate of promoting monetary stability and sound financial system .Economic growth and development in any economy is propelled by the quality of goods and services provided within that economy as well as their competiveness with other economies. One of the major factors that have constrained the pace of economic growth and development is lack of access to sustainable financial services by a greater proportion of the populace. Inclusive growth will follow at a faster pace when every segment of the populace engages in the productive process through access to sustainable financial services. Access to financial services could assist to alleviate poverty and promote both growth and standard of living when the economic active-poor and the disadvantaged are enabled to save, borrow and reinvest for the growth of the real sector of the economy. In this, paper an effort has been made to understand the inclusive growth phenomenon, its need and sustainable financial inclusion as a veritable tool to attain it, relative to Nigerian experience.

Approaches and design of microfinance programmes for the ultra-poor in Nepal

Microfinance programmes have emerged to serve the poor who are excluded by conventional banks and financial institutions. However, in the context of Nepal, accessible and sustainable financial services are still limited. Only 40 per cent of Nepalese are served by formal financial institutions. Experience has shown that people living in extreme poverty need several forms of support, such as grants for livelihoods and for purchasing productive assets, business development training, and financial literacy. This paper discusses barriers surrounding supply and demand side of financial systems for promoting financial inclusion. It argues that reaching the ultra-poor is only possible if appropriate strategies are devised to address the existing barriers that prevent inclusion of the unserved and under-served. The paper presents lessons learned from several initiatives to enhance financial inclusion in Nepal, and suggests approaches for serving the ultra-poor in the future.