Theories of Sustainable Finance

Abstract

This paper attempts to formulate new theories of sustainable finance, meeting a need to establish a set of propositions that can help us understand the behaviour and actions of economic agents towards sustainable finance. The paper used a literature survey to establish a theoretical relationship between sustainable finance and the actions of economic agents. The paper proposed six theories of sustainable finance, namely, the priority theory of sustainable finance, the resource theory of sustainable finance, the peer emulation theory of sustainable finance, the life span theory of sustainable finance, the positive signalling theory of sustainable finance, and the system disruption theory of sustainable finance. These theories offer believable explanations for the behaviour and actions of economic agents towards sustainable finance. Academics, policy makers, economists, researchers and students will find these theories very useful in their work in sustainable finance.