International Journal of Sustainable Economy (17 papers in press)

Regular Issues

• Country-wide protests and financial stability  
  by Peterson Ozili 
  Abstract: This paper investigates the effect of country-wide protests on financial stability after controlling for inflation rate and the level of political stability. Country-wide protests may pressure a powerful government to listen and meet the demands of relatively less powerful groups, but country-wide protests can be destructive especially when such protests lead to the destruction of the business assets of the clients of financial institutions thereby making it difficult for them to meet their loan repayment and other obligations to financial institutions, and posing risk to the stability of the financial system. Financial stability and country-wide protests data were analysed for the UK. The empirical results show that bank non-performing loans are higher in country-wide protests years, implying that country-wide protests have a significant negative impact on financial stability through high non-performing loans in years where there are country-wide protests.
  Keywords: financial stability; UK; protest; demonstrations; non-performing loans; country-wide protests.
  DOI: 10.1504/IJSE.2025.10063273
   
  
• Petroleum subsidies, clean energy transition, and decarbonization in oil-producing developing countries: what is the role of regulatory quality  
  by Abdul Rais Bin Abdul Latiff , Ibrahim Shittu, Siti Aisyah Baharudin 
  Abstract: Energy transition and decarbonisation are critical gateways to cutting carbon emissions, improving energy security, and achieving the United Nations Sustainable Development Goals. Researchers have paid enormous attention to understanding key drivers of clean energy transition and decarbonisation. However, they have overlooked the role of fossil fuel subsidies and regulatory quality in developing countries where fuel subsidies are prominent and institutional quality is weak. This study employs a Prais-Winsten regression to examine the impact of petroleum subsidies and regulatory quality on clean energy transition and decarbonisation in 25 developing countries between 2010 and 2020. The result revealed that petroleum subsidies hinder the shift to clean energies and encourage high carbon intensity. However, when these subsidies are accompanied by a strong regulatory quality, they promoted energy transition and decarbonisation. The study recommends practical pathways to reform fuel subsidies, swap subsidy saving into clean energies, and strengthen regulatory quality.
  Keywords: clean energy; energy transition; carbon emission; decarbonisation; petroleum subsidies; regulatory quality; developing countries; Prais-Winsten regression; SDGs; renewable energy.
  DOI: 10.1504/IJSE.2025.10057898
   
  
• The relevance of renewable energy and green innovation in environmental sustainability: evidence from BRICS countries  
  by Lakshmana Padhan, Savita Bhat 
  Abstract: The study examines the significance of green innovation and renewable energy usage in reducing the carbon and ecological footprints in Brazil, Russia, India, China, and South Africa (BRICS) countries. It applies a series of econometric techniques and the Driscoll-Kraay standard errors regression approach to data collected between 1995 and 2018 based on the environmental Kuznets curve (EKC) hypothesis. Important macroeconomic control variables, such as industrialisation, urbanisation, financial development, trade openness, and natural resources, are also used to strengthen the model. Empirical results show that a 1% increase in green innovation reduces the carbon and ecological footprint by 0.229% and 0.226%, respectively. Further, increasing renewable energy consumption by 1% decreases the carbon and ecological footprints by 0.024% and 0.032%, respectively. Furthermore, the empirical findings support the EKC hypothesis. The study has important policy implications for governments and policymakers of emerging countries to invest more in green innovation and promote renewable energy.
  Keywords: green innovation; renewable energy; carbon footprint; ecological footprint; BRICS; Driscoll-Kraay standard errors; environmental Kuznets curve; EKC.
  DOI: 10.1504/IJSE.2025.10063275
   
  
• The moderating role of board gender diversity in the relationship between corporate social responsibility and financial performance: evidence from France  
  by Karima Lajnef, Sahar Turki, Ellouz Siwar 
  Abstract: This study examines the influence of corporate social responsibility (CSR) and governance mechanisms on financial performance (FP) and investigates how board gender diversity (BGD) moderates the relationship between FP and CSR. The study analyses data from French companies listed on the SBF 120 index between 2008 and 2020. The findings suggest that CSR performance and BGD have a positive impact on FP. Additionally; the study reveals a moderation of BGD in the relationship between CSR and FP. The research adds to our theoretical and empirical understanding of how BGD relates to CSR and FP. The results highlight the importance of considering the potential impact of CSR policy, governance mechanisms, and BGD on FP. Therefore, stakeholders should be more aware of these factors to promote better financial outcomes.
  Keywords: corporate social responsibility (CSR); financial performance (FP); board gender diversity (BGD); governance mechanisms.
  DOI: 10.1504/IJSE.2025.10060464
   
  
• Modelling Connectedness and Diversification Among Socially Responsible Investments in Asia
  by Neha Seth, Deepti Singh 
  Abstract: The study investigates the cointegration and volatility interdependence among sustainable indices of emerging Asian countries by employing Johansen’s cointegration, Granger causality test and dynamic conditional correlation (DCC) GARCH model. The analysis reveals no long-run relationship among these indices, and all the indices are significantly affected by their lagged values. The results also present that past shocks and volatility have a significant role in the present volatility of the sustainable indices. However, past volatility has more impact, which lasts with stronger persistence. The significant DCC terms infer that volatility spillover exists between sustainable Asian markets. The study also calculated optimal portfolio weights to provide better diversification opportunities to minimise the risks without hampering the potential returns. The study suggests that long-term investors may earn profit by adding these non-integrated sustainable indices to their portfolios, but they must diversify and hedge to safeguard from losses during economic and financial turmoil.
  Keywords: volatility spillover; Johansen’s cointegration; DCC-GARCH; sustainable stock index; optimal portfolio weights; emerging Asia.
  DOI: 10.1504/IJSE.2025.10060802
   
  
• Exploring the linkage of international trade and environmental pollution in Asia  
  by Hoang Xuan Binh, Huong-Giang Pham, Nguyen Ha My, Lai Thi Huyen Trang, Nguyen Minh Tien 
  Abstract: This paper utilises data from Asian countries from 2000-2020 (with consideration of the COVID-19 period) to explore the linkage between international trade and environmental pollution in this region. After controlling for heteroscedasticity and autocorrelation, results of a fixed-effect regression show that the export turnover, import turnover, GDP per capita, electricity consumption, population growth rate, and net receipt ratio of FDI to GDP have significantly improved the level of CO2 emission in Asia. In addition, the paper also confirms the existence of the environmental Kuznets curve and that maintaining a surplus trade balance will help reduce CO2 emissions in a country. These empirical insights are particularly interesting to policymakers since they help build sensible policies about economic growth, energy conservation, and foreign direct investment to improve environmental quality.
  Keywords: international trade; environmental pollution; FEM; environmental Kuznets curve; EKC; pollution haven hypothesis.
  DOI: 10.1504/IJSE.2025.10061128
   
  
• ESG Disclosure and Financial Success: A Comparative Dive into India's Manufacturing and Service Sectors  
  by Santi Gopal Maji, Prachi Lohia 
  Abstract: This paper examines the financial impact of environmental, social, and governance (ESG) disclosure in Indian manufacturing and service companies. The study employs a panel approach by utilising secondary data for a sample of 209 Indian-listed firms for 2020 and 2021. Empirical analysis conducted using suitable panel regression models reveals a significant positive financial impact of ESG disclosure in both sectors. However, manufacturing firms showcase improved market value while the service-sector firms experience higher accounting profits. This study highlights the role of a firm’s sector in explaining the consequent financial impact of ESG disclosure. It also emphasises the need for higher but material ESG disclosure and heightened investor awareness. Notably, this study represents the first comparative analysis of ESG’s effect on the financial performance of Indian manufacturing and service firms by considering indigenous ESG ratings from the Credit Rating Information Services of India Limited (CRISIL).
  Keywords: ESG; financial performance; manufacturing firms; service firms; CRISIL; India.
  DOI: 10.1504/IJSE.2025.10061702
   
  
• Nexus between agricultural production and environmental degradation based on the theory of Environmental Kuznets Curve: a dynamic panel data analysis  
  by Swati Sinha Babu  
  Abstract: Expansion and proliferation of agricultural sector plays a vital role in achieving the sustainable development goals related to ending poverty and hunger. However, its impact on the environment is not free from contention. The aim of present paper is to explore the association between agricultural production and methane emissions (as measure of environmental degradation), across 87 countries classified into higher, middle and lower income groups, covering the period 1990-2020. We have employed dynamic system generalisation method of moment (GMM) to investigate the environmental Kuznets curve hypothesis and study the long-run causal effects among considered variables. Results indicated presence of N-shaped relation between agricultural production and methane emissions for all groups of countries. Findings also revealed that fertiliser consumption and livestock production had detrimental impact on environment. Lastly, policy recommendations have been made related to agricultural production techniques and livestock management strategies that might help development of sustainable agriculture.
  Keywords: agricultural production; methane emission; rice cultivation; livestocks; environmental Kuznets curve; EKC; dynamic GMM; sustainability.
  DOI: 10.1504/IJSE.2025.10062034
   
  
• Effects on firm decisions considering the temporality of environmental policy  
  by FELIPE IGNACIO RIVERA PRADENAS, Katherin López, Jorge Zamorano 
  Abstract: This research analyses the effects of the temporality of environmental policy on firms’ location and abatement decisions. The policies are implemented by a regulator concerned about the welfare of society and environmental pollution. Therefore, it applies two instruments simultaneously: the tax on emissions, which seeks to internalise environmental costs, and the subsidy to clean technologies, which incentivises their adoption. In addition,the optimal levels of tax and subsidy that maximise social welfare are studied, considering the impact of the timing of the decision (ex-ante or ex-post). As for its resolution, a model of duopolistic firms competing in quantities in an emission-intensive sector is used. Among the main results, it is demonstrated that for both an ex-ante and ex-post implementation, social welfare is enhanced when environmental policies are in place. However, when the tax is applied ex-post and only one company chooses to remain in the local country, environmental damage increases.
  Keywords: environmental regulation; temporality of the decision; emission tax; subsidy R&D; location.
  DOI: 10.1504/IJSE.2025.10062267
   
  
• Exploring the impact of economic growth, export diversification, trade openness and renewable energy consumption on ecological footprint - evidence from India  
  by Saima Shadab  
  Abstract: This study investigates the nexus between economic growth, export diversification, trade openness, renewable energy consumption, and ecological footprint for India, using annual data from 1971 to 2014. The Lee-Strazicich unit root test is employed to take into account breaks in the data. Furthermore, the autoregressive distributed bound test (ARDL) has been used to examine the short and long-run relationship between the variables. The estimates reveal that economic growth and export diversification increase ecological footprint in the long run but not in the short run. Besides, the coefficient of renewable energy consumption indicates that an increase in it leads to an increase in ecological footprint. In contrast, an insignificant relationship between trade openness and ecological footprint was obtained. Based on the findings, the study recommends that an appropriate mix of policies related to energy efficiency, sustainable development and international trade is required to control environmental degradation in India.
  Keywords: economic growth; export diversification; ED; trade openness; TO; renewable energy consumption; ecological footprint; EF; environmental degradation; sustainability; India.
  DOI: 10.1504/IJSE.2025.10062962
   
  
• How do real and financial sectors in Africa respond to uncertainties from China, USA, and Europe  
  by Oliver E. Ogbonna, Jonathan E. Ogbuabor 
  Abstract: In spite of rising cross-border propagation of uncertainty shocks occasioned by the recent COVID-19 outbreak, existing studies barely addressed cross-border uncertainty effect on real and financial sectors, especially in Africa. Thus, this study has taken the initiative to investigate how the real and financial sectors in Africa are reacting to policy uncertainties from China, the USA and Europe. The study employed the generalised method of moment procedures for 41 African economies from 2010 to 2019. We find that rising uncertainty in China and Europe have significant adverse impacts on Africa’s real sector, while the impact of the USA uncertainty remains muted. Interestingly, we find that uncertainties from China and Europe have significant positive effects on Africa’s financial sector, suggesting that Africa is a safe-haven where investors transfer their investments away from risky environments witnessing high uncertainty. The study provides policy suggestions.
  Keywords: uncertainty; real sector; financial sector; two-step system GMM; Africa; China; the USA.
  DOI: 10.1504/IJSE.2025.10063600
   
  
• Economic freedom and financial development: do they reduce the shadow economy? A case study of Southeast Asian countries  
  by Buu Kiem Dang  
  Abstract: This study aims to assess the impact of economic freedom, financial development, and various macroeconomic factors on the scale of the shadow economy. The research sample includes 10 countries in the Southeast Asian region (excluding Timor-Leste) for the period from 1995 to 2018. The author employs various estimation methods on panel data, including the Fixed Effect Model, Driscoll and Kraay estimation, and two-step system GMM. The results indicate that economic freedom and financial development play significant roles in reducing the size of the shadow economy. This study suggests that (i) governments should consider improving economic freedom, particularly through substantial enhancements in trade freedom; (ii) governments need to implement more measures to facilitate access to credit for businesses and individuals in the private sector, and (iii) governments should maintain political stability in a stable and robust manner to contribute to reducing the size of the shadow economy.
  Keywords: economic freedom; trade freedom; financial development; shadow economy; Southeast Asian; political stability; credit for businesses; Driscoll and Kraay estimation; system GMM; fixed effect model; FEM.
  DOI: 10.1504/IJSE.2025.10065315
   
  
• Does ESG performance influence accounting- and market-based firm risk?  
  by Nadine Ladnar, Moritz Schätzlein, Ricardo Palomo, Alexander Zureck 
  Abstract: The relevance of corporate social responsibility (CSR) is increasing as an important factor in managers' decision-making process. Future sustainable and continuing corporate financial performance (CFP) can only be achieved by considering stakeholders' expectations and improving corporate social performance (CSP). Being a driver of a company's prospective economic performance, CSR has become an element of risk analysis, which explains its growing relevance for authorities, banks, and investors. Therefore, this study examines the relationship between CSP and firm risk, hypothesising a risk-mitigating effect of CSP. Using corporates' leverage and beta as indicators for firm-idiosyncratic and systematic risk, 250 firm-year observations between 2015 and 2019 of the German DAX 30 and MDAX are analysed within multiple linear regression. However, our findings do not provide clear results while indicating contrary effects on systematic and unsystematic risk instead, somehow reflecting the discrepancy of the current discourse on this topic.
  Keywords: ESG performance; environmental; social; governance; accounting-based firm risk; market-based firm risk; corporate social responsibility; CSR; sustainability; corporate social performance; CSP.
  DOI: 10.1504/IJSE.2024.10055416
   
  
• Globalisation and manufacturing sector performance: the role of institutional quality in Nigeria  
  by Christian Agu, Ifeoma C. Mba, Jonathan E. Ogbuabor, Ezinne N. Odoemelam 
  Abstract: This study examined the relationship between globalisation and Nigeria's manufacturing sector performance and how institutional quality is moderating this relationship during the period 2000-2020. The autoregressive distributed lag (ARDL) estimation technique was used. The findings indicate that globalisation has a direct positive impact on manufacturing sector performance in Nigeria, both in the short and long run. The institutional indicators predominantly showed a negative direct effect on manufacturing sector performance, both in the short and long run. Interestingly, the interaction between globalisation and the institutional indicators showed that the weak institutions prevalent in Nigeria are yet to dampen the positive effect of globalisation on the nation's manufacturing sector. Furthermore, when the components of globalisation were used in the analysis, we found that while political and social globalisation enhance the performance of Nigeria's manufacturing sector, economic globalisation deters it. The study gave some policy recommendations based on the findings.
  Keywords: globalisation; manufacturing sector; institutional quality; ARDL model; error correction model; Nigeria.
  DOI: 10.1504/IJSE.2024.10055881
   
  
• Factors influencing intention to use hybrid electric vehicles in an oil-rich country: from vehicles market managers' perspective  
  by Akram Elahi Gol, Hossein Rahmany Youshanlouei, Milan Ščasný 
  Abstract: The widespread uptake of electric vehicles is believed to be essential to deal with extreme air pollution. However, the current market penetration of electric vehicles in developing countries is negligible. This study aims to evaluate the preferences of managers in the automotive industry in Iran to use hybrid electric vehicles (HEVs). We use the goal-directed behaviour model extended by environmental concerns, hedonic and symbolic values to examine the role of social-psychological factors in the intention to use HEV. Amongst the analysed social-psychological factors, desire is the strongest one to predict intention to use HEVs, whilst hedonic and symbolic values alongside environmental concerns amplify the effect of desire. Our results suggest that Iranian people who attach more symbolic value to the new technology will also have a stronger desire to use HEV since ownership and usage of such cutting-edge technology are associated with prestige and a luxury lifestyle.
  Keywords: hybrid electric vehicles; HEVs; intention to use a low carbon technology; extended model of goal-directed behaviour; partial least square; PLS; automotive industry.
  DOI: 10.1504/IJSE.2024.10054427
   
  
• Revisiting the impact of board characteristics on environmental, social and governance performance: lesson from European firms  
  by Tahani Tahmid, Farjana Nasrin, Paolo Saona, Md. Abul Kalam Azad 
  Abstract: Stakeholders' concerns are no longer limited to firms' financial performance today. They are also concerned about the environmental, social and governance (ESG) performance which represents the non-financial performance of a firm. However, there are no consistent findings on how board characteristics can influence ESG performance. This study aims to revisit the impact of board characteristics on the ESG performance of a firm in the context of European firms, Europe being at the forerunner for ESG regulations globally. To test the study's hypothesis, a linear model with fixed effect GLS (generalised least squares) is used on a 12-year panel dataset from the year 2008 to 2020 of 180 listed firms categorised in ten economic sectors operating in 18 countries. It has been found that among other board characteristics, women on the board and the presence of CSR committee have a significant positive impact on ESG performance. However, board size, number of board meetings and board independence have a negative or insignificant impact.
  Keywords: ESG score; women on board; board characteristics; firm performance.
  DOI: 10.1504/IJSE.2024.10053959
   
  
• Commodity prices, institutional quality and export diversification: the case of Mongolia  
  by Gulguu Adiyabaatar, Liu Zhizhong 
  Abstract: Mongolia is a mineral commodity dependent and lower-middle-income country with a highly concentrated and volatile export basket. Interestingly, the potential determinants of the country's export diversification have not explored empirically. This paper is intended to investigate the effects of commodity price shocks and institutional quality on export diversification in Mongolia. To do so, the ARDL bounds testing approach is employed for the empirical analysis, using a dataset covering the period of 1995-2019. The results of the analysis suggest that commodity price shocks measured by the aggregate index of commodity prices and a country-specific commodity terms of trade index influence Mongolia's export diversification in both the long and short-run. For the contract intensive money, a proxy for institutional quality, it supports export diversification in Mongolia in the short-run, but not in the long-run.
  Keywords: commodity dependency; export concentration; commodity price fluctuations; institutional quality; ARDL bounds testing approach; Mongolia.
  DOI: 10.1504/IJSE.2024.10063282