<![CDATA[Research Originality — This study provides a novel contribution by examining how financial institutions and financial markets influence sustainable development, using environmental, social, and governance (ESG) performance as an overall indicator. The research is comprehensive and not overly explored in existing literature because it employs a dynamic panel methodology and incorporates trade and investment variables to provide a broader perspective. Research Objectives — The proposed study will examine whether financial development can go beyond just increasing access to financial services to also fostering sustainable economic growth free from negative social or environmental effects. Research Methods — This paper uses panel data on 56 countries from 2016 to 2023. In a dynamic relationship, the system generalised method of moments (SYS-GMM) is used to apply a dynamic panel data method to overcome endogeneity and dynamic relationships. Empirical Result — The results indicate that ESG performance can support sustainable development in the short term, while its long-term success depends on stronger policies and regulatory frameworks. Traditional approaches to financial development can hinder the achievement of ESG goals, but proper regulation can steer financial systems towards sustainability objectives. Economic growth, measured by GDP, often conflicts with ESG performance, although international trade can contribute positively to a sustainable economy when backed by green trade policies. Additionally, foreign direct investment has minimal impact unless there is a focus on sustainable sectors. Implications — The study emphasizes the need for policy and regulatory reforms to better align financial development and economic growth with sustainability goals. It also highlights the importance of green trade policies and targeted investment strategies in promoting sustainable development outcomes.]]>
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