Sustainable development: Driving force from the relationship between finance inclusion, green finance and green growth

Abstract

Abstract This paper studies sustainable development and its driving force—the linkage between financial inclusion, green finance and green growth in 14 low financial development countries (LFDCs) and 11 high financial development countries (HFDCs) from 2005 to 2019. Bayesian regression results show that when green finance is not taken into account, the probabilities that green GDP growth positively impacts sustainable development in HFDCs and LFDCs are 58.31% and 61.06%, respectively. The probability that financial inclusion positively impacts sustainable development in HFDCs is 88.34% and it is 100% in LFDCs. The interaction between green finance and financial inclusion positively impacts sustainable development in both groups of countries. In addition, this article also provides evidence that the rate of urbanization and trade openness positively affect sustainable development. In contrast, the rate of inflation and the population growth rate impact sustainable development negatively.