Impact of financial development, technological innovation, green trade and institutional quality on sustainable development: Revelations from global evidence

Sustainable development is driven by a combination of economic growth, environmental protection and social development. Accordingly, this study examines sustainable development’s relationships with financial development, technological innovation and green trade with a particular focus on the moderating role played by institutional quality. Taking a two-step system generalised method of moments approach to the analysis of data from 151 countries in 2004 to 2021, this study finds that financial development and, more specifically, financial market development have positive and significant effects on sustainable development, while financial institutional development has significant negative effects. Institutional quality emerges as both a direct and moderating positive factor, diffusing the positive impact of institutions and financial development on sustainable development while mitigating the risks commonly associated with financial institutions. Technological innovation and green trade contribute significantly to sustainable development, while urbanisation detracts from it. These findings point to a clear need for a comprehensive approach that combines financial, technological, trade and institutional policies in pursuit of sustainable development.