Drivers of Green Sustainable Development in Emerging Economies: A Sur-Based Income Inequality

Abstract

This study investigates the key financial drivers influencing green sustainable development (GSDev) and income distribution equality across selected emerging and advanced economies namely the U.S., Brazil, Indonesia, France, and the U.K. Using the Seemingly Unrelated Regression (SUR) model, the research explores the impact of financial inclusion, digital financial services, bank credit risk, and net investment in non-financial assets on GSDev and inequality outcomes. The findings reveal that enhanced financial inclusion and digital financial transactions significantly support green development, while higher income inequality hinders sustainability progress. Conversely, green development itself is found to exert a negative influence on equitable income distribution. However, this adverse effect can be offset by greater public investment in non-financial sectors and improved credit risk management. These interlinkages highlight the complex yet critical role of financial ecosystems particularly access, risk, and digitalization in fostering sustainable and inclusive economic growth. The study offers strategic insights for policymakers and financial authorities, emphasizing the importance of integrated, stability-oriented financial policies to support long-term green transformation in emerging markets.