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The Impact of Financial Development on Environment, Social, and Governance (ESG) Performance: The Case of MENA Countries
Alsuhaibani, Alhanouf
Alsuhaibani, Alhanouf
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Abstract
In recent times, the world has witnessed rapid development that has generated a substantial loss of habitat and degradation of the environment. This situation poses significant risks of natural disasters for many nations. The development of green technology has been identified as pivotal in curtailing environmental hazards, and financial development has been lauded for its role in funding this endeavor. However, there needs to be more research concerning the impact of financial development on environmental, social, and governance (ESG) performance, which is a crucial element of sustainable management. The present study aims to address this gap in knowledge by investigating the association between financial development and ESG performance in 17 MENA countries from 2012 to 2020. Various financial development indicators, such as global financial development, financial institutions, and financial markets, are analyzed to gauge their impact on ESG behavior. Factors such as trade openness (TO), economic growth (GDP), and foreign direct investment (FDI) flows critical features that are examined, with a specific focus on the relationship between economic growth and environmental, social, and governance (ESG) performance in the MENA region. These findings offer important insights that could inform policy-making promoting sustainable economic development while considering the environmental and social implications.