Sustainable Finance and ESG Importance: A Systematic Literature Review and Research Agenda

Abstract

Over the last decade, sustainable finance has appeared to be capturing a high level of interest as a crucial pillar of sustainable development. The process of taking environmental, social, and governance (ESG) considerations into account when making investment decisions in the financial sector is expected to play a key role in this framework, and although it has attracted the attention of many scholars and academics, a lack of understanding of the nature of the phenomenon remains. Therefore, on the basis of a systematic literature review of 80 studies, we examine, in detail, the subject areas and emphasize the main points in the existing literature. The findings reveal that there are four main thematic areas attracting research interest, as follows: (1) A shift in value creation; (2) green bonds; (3) ESG ratings and performance; and (4) sustainable finance, banking, and financial risks. Finally, this study outlines future research avenues in the field.

Systemic Risk Arising from Shadow Banking and Sustainable Development: A Study of Wealth Management Products in China

“…The rapidly evolving shadow banking sector was once regarded as a significant contributor to financial systemic risk, providing funding for high-risk ventures through maturity mismatches, liquidity conversions, leveraged trading, and incomplete credit risk transfers. However, the concealment of relevant information to evade supervision has undermined the stability and sustainability of the financial system [14,15]. According to the Flow of Funds data in the US, shadow banks have amassed systemic risk due to excessive leverage and endogenous operational behavior, currently posing a significant impediment to the sustainable development of the financial system [16].…”