The Role Of Finance In Ensuring Sustainable Economic Development

Abstract :

Recently, there is a discussion about the need for rethinking finance for sustainable economic development; in particular how to influence inclusive growth through finance. There is a widespread opinion that conventional finance is not suited to financing sustainable economic growth. It is indicated that sustainable finance provides effective financing for sustainable economic development. The article is original and as one of the first searches for the answer to the question whether countries with more sustainable finance have more sustainable economic development. The article attempts to investigate if there is a relationship between sustainable finance and sustainable economic development and thus if sustainable finance ensures a better adjustment of the financial sphere to the needs of the real economy. The study uses relative taxonomy method to analyze the level of development both in sustainable economic development and sustainable finance in the case of 23 EU countries belonging to OECD. For this purpose Eurostat dataset from 2016 was analysed. 24 indicators representing sustainable finance (15) and sustainable economic development (9) were used. The study results show diversity of EU countries belonging to OECD in terms of the studied phenomenon. In both the economic and financial scope, the best position applies to countries in Northern and Western Europe, with the exception of Belgium. The countries of Eastern and Southern Europe take different and much worse ranking positions.