Rapid Growth Of Sustainable Finance In Emerging Markets: Opportunities And Potential Risks

Abstract

In developing economies, the domain of sustainable finance is experiencing rapid growth attributed to several factors, including an increasing investor appetite for ethically aligned investments, heightened environmental awareness, and advancements in financial technology. This research investigates the primary determinants propelling this growth as well as the potential risks and challenges that may influence the long-term viability of the sector. Employing a quantitative methodology, data was amassed from 300 stakeholders encompassing investors, financial institutions, and policymakers via a meticulously designed questionnaire. The analysis indicates that environmental awareness and investor demand constitute the most pivotal factors propelling the growth of sustainable finance, whereas regulatory ambiguity and greenwashing pose substantial risks. The results highlight the imperative for more robust regulatory frameworks and enhanced transparency to uphold investor trust and guarantee the authenticity of sustainable finance initiatives.This research provides practical suggestions for policymakers, investors, and financial institutions aimed at enhancing the resilience and effectiveness of sustainable finance within developing economies. By addressing the recognized risks and capitalizing on the essential drivers, emerging markets can more effectively align their financial practices with sustainable development objectives, thereby promoting enduring economic growth while advancing environmental and social goals.