Indonesian Journal of Economics, Business, Accounting, and Management

E-ISSN: 2988-0211 | Vol. 02, No. 04, 2024, pp. 77-91

An International Journal

E-ISSN: 2988-0211 | Vol. 02, No. 04, 2024, pp. 77-91

Journal Homepage: https://journal.seb.co.id/ijebam/index

Green Finance and Sustainable Development: A Cross-Sectional

Study of Financial Mechanisms Driving Environmental
Responsibility
Saeed Angorani1*
1
Research Scholar, Lisbon School of Economics & Management (ISEG), University of Lisbon.
1649-004 Lisbon, Portugal.
*
Corresponding Author, E-mail: [email protected]
ARTICLE INFORMATION ABSTRACT
Section The purpose of this cross-sectional study is to investigate
Research Articles the complex connections that exist between environmental
Article History responsibility, sustainable development, and green
Article Submitted: 15/03/2024 financing mechanisms in financial institutions. The study
Accepted: 21/03/2024
Available online: 13/05/2024
employs quantitative approaches and cross-sectional
Keywords analysis using a sample of 500 financial representatives to
green finance investigate connections between variables. To find patterns,
environmental responsibility statistical procedures including regression, t-test, and
sustainable development correlation are used. This research offers significant
regulatory environment understanding of the complex relationships affecting
corporate social responsibility (csr)
environmental responsibility in the finance industry. The
innovative financial products
connections between green finance, innovation, CSR
integration, and regulatory frameworks provide a thorough
knowledge of the ways in which financial institutions may
actively support sustainable development objectives.
©2024 PT Solusi Edukasi Berdikari: Publishers. All rights Reserved
INTRODUCTION
Green finance and sustainable development represent a paradigm shift in the way we approach
economic growth, environmental preservation, and social equity (Kwilinski, Lyulyov and
Pimonenko, 2023). In an era marked by hitherto unseen obstacles like resource depletion, social
injustice, and climate change, incorporating green finance techniques is essential to creating a
future that is both ecologically conscious and economically stable (Ye et al., 2022). This
transformative approach emphasises the need for a comprehensive strategy that takes into the
long-term well-being of our planet and its people by acknowledging the complex interactions

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between the economic, environmental, and social systems. Beyond traditional investment
models, green finance focuses on the allocation of money to projects and activities that not
only produce financial returns but also favourably impact social inclusion and environmental
sustainability (Udeagha and Ngepah, 2023). It represents a shift from the conventional wisdom
that sees environmental preservation and economic growth as antagonistic objectives. Rather,
green finance aims to match financial choices with more general sustainability goals,
understanding that economies' health is inextricably tied to the health of the ecosystems they
depend on and the social fabric they affect (Madaleno, Dogan and Taskin, 2022).
The growing risks associated with climate change, biodiversity loss, and socioeconomic
inequities highlight the need for green financial solutions (D’Orazio, 2023). A worldwide
awakening has been sparked by the scientific agreement that climate change is manmade,
forcing corporations, financial institutions, and governments to reevaluate their responsibilities
in a world confronting environmental challenges (Setyowati, 2023). Given this, green finance
becomes apparent as a major force for change, providing a route forward for a future that is
more resilient and sustainable (Streimikiene and Kaftan, 2021). Integrating environmental,
social, and governance (ESG) attentions into investment decisions is one of the core tenets of
green finance (Ma’ruf, Mahomed and Mohamad, 2021). According to Gregory, Stead and
Stead (2021), this method goes beyond the conventional financial measures by accounting for
the projects' effects on the environment, its social ramifications, and the general governance
structure of the participating organisations. Green finance aims to steer money towards actions
that positively affect the environment and society while reducing negative externalities by
integrating ESG issues (Liang and Renneboog, 2020).
Green finance ideas are being adopted by a broad range of Monk and Perkins (2020).
Sustainability is becoming more and more popular in the financial sector, as more investors,
asset managers, and financial institutions include it into their main business plans. One example
of the rising trend of financial instruments specifically created to support environmentally
friendly initiatives is the emergence of green bonds (Hadaś-Dyduch et al., 2022). These bonds
raise money for projects including energy efficiency campaigns, the construction of sustainable
infrastructure, and renewable energy projects. Moreover, green financing is in accordance with
the United Nations Sustainable Development Goals, which set forward a more comprehensive
worldwide agenda for sustainable development (SDGs). A road map for tackling issues
including poor, injustice, deterioration of the environment, climate change, peacefulness, and
fairness is provided by these aims. A symbiotic link between financial success and societal
well-being is created by green finance, which is a potent vehicle for mobilising resources
towards accomplishing these goals (Iacobuţă et al., 2022).
A revolutionary path toward a more peaceful cohabitation of economic success,
ecological integrity, and social fairness is represented by sustainable development and green
money. The incorporation of green finance concepts into investment choices and corporate
tactics is a crucial measure towards tackling the many issues confronting our world (Hariram
et al., 2023). Green finance has the ability to fundamentally alter the global economic landscape
and make a substantial contribution to the development of a more sustainable and inclusive
future by promoting the alignment of financial incentives with environmental and social
objectives. Green finance will surely continue to develop and play a crucial part in determining
the fate of our planet as the globe makes its way towards a more sustainable and greener future
(Liu, Lei and Zhang, 2021).
This cross-sectional study looks at the many tactics and tools used by companies,
governments, and financial institutions to promote environmental responsibility in an effort to
offer light on how the field of green finance is changing. We hope that our examination of the
complex aspects of this junction will provide important new information to the continuing

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conversation about how to support a financial system that is in keeping with sustainable
development's tenets. The objectives of the study are as follows:
1. To assess the level of environmental responsibility exhibited by financial institutions.
2. To examine the relationship between green finance investments and environmental
responsibility.
3. To evaluate the influence of the regulatory environment on the sustainable development
practices of financial institutions.
4. To investigate the association between corporate social responsibility initiatives and
environmental responsibility in the financial sector.
5. To analyse the impact of innovation in financial products on the overall sustainable
development practices of financial institutions.
The study's framework is divided into seven distinct parts. The second segment's primary
focus is the literature review. The recommended approach is then covered in the third part,
along with the research design, methodology employed, and hypothesis formulation. The
findings of the hypothesis testing are examined in the next section. In the fifth section, there is
a comprehensive discussion. In the sixth section, the study's ramifications are then looked at.
Concluding remarks, an overview of the study findings, and a summary are included in the
seventh and last section.

LITERATURE REVIEW & HYPOTHESIS

Zhou, Tang and Zhang (2020) investigated how green money affects environmental quality
and economic growth. We utilise data from 2010 to 2017 about thirty Chinese provinces and
municipalities' green spending, economic growth, and environment protection. The model
demonstrated the beneficial impact of green money for environmental enhancement. Green
financing does, however, have varying effects on environmental quality depending on the
economic development level. Finally, using the concept of the environmental Kuznets curve, a
model of how green financing influences the relationship between environmental quality and
economic development is developed. According to the concept, green finance has the potential
to greatly enhance this link and provide a situation where both the environment and economic
development benefit.
Cui, Wang and Wang (2020) examined how each factor affected the evolution and
changes in the green finance industry. The investigation focuses on the equilibrium strategy
and the influence mechanism of the involved actors. The outcome demonstrated that: first,
advancements in sustainability and cleaner manufacturing are positively impacted by the
integrity of the green finance system. Second, it is imperative to tighten government
regulations, cut the production costs of green finance for businesses and financial institutions,
boost compensation for consumer pollution, and lower government oversight expenses.
Falcone and Sica (2019) provide actual proof of the potential and difficulties associated
with green finance (GF), examining the economic obstacles that might impede green
enterprises' investment choices. In order to do this, they investigated the situation utilising a
content analysis approach supported by a survey to examine Italian biomass suppliers given to
a group of specialists. Experts acknowledge that while GF may offer a means of attaining
ecologically friendly innovation routes, biomass producers still have to confront financial and
institutional barriers while attempting to finance their investment plans. Gangi et al. (2019)
examined the driving forces behind banks' efforts to become greener, and after looking into the
connection between a bank's environmental involvement and risk, it was discovered that banks
with more environmental consciousness also had lower risk.

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Hsu et al. (2021) examined the relationship between green technical innovation and the
growth of green finance in West and Central China, as well as the impact of this relationship
on regional economic growth. In mainland China, empirical investigations employing
econometric estimation were conducted utilising the Ordinary Least Square (OLS) paradigm.
According to the research, green finance limits overinvestment in clean energy by reducing
short-term lending. Long-term loans, on the other hand, have minimal influence on
overinvestment in renewable energy, and the intermediary effect cannot be sustained. Green
financial growth will, in the meanwhile, decrease overinvestment in renewable energy and, to
a certain extent, boost the productivity of renewable energy investments.
Guang-Wen and Siddik (2022) investigated the effects of corporate social responsibility
(CSR) and green financing on the environment financial performance of banks in developing
countries such as Bangladesh. By applying a convenience sampling method that is non-
probabilistic, 388 workers of Private Commercial Banks (PCBs) in Bangladesh provided
primary data, which were then analysed using the Structural Equation Modelling (SEM)
method to determine the relationship among the factors under investigation. The findings
indicated that the environmental performance is positively impacted by CSR initiatives. Arian,
Sands and Tooley (2023) investigated characteristics across businesses operating in various
industrial sectors over time in order to determine the longitudinal association between CSR
performance and financial success. Panel regression research on publicly traded Australian
companies from 2007 to 2021 reveals a favourable relationship between financial performance
and CSR performance. Moreover, our sector-specific study reveals noteworthy differences
Saeed, Mudliar and Kumari (2023) examined the connection between Ghana's publicly
traded financial firms' financial performance and corporate social responsibility. Secondary
data was supplied by twelve financial institutions that are listed on the Ghana Stock Exchange
(GSE) over a ten-year period (2010–2019). Regression results, rotating factors, factor score
efficiency, descriptive statistics, and a correlation matrix were used to analyse the data. The
evidence indicates that CSR, has a positive impact on stock returns and profitability. This
shows that even if CSR increases a company's potential for financial success, it should be
considered an essential component of long-term business plans rather than an elective.
Park and Kim (2020) gave an overview of green banking, highlighting how it's a
developing field that can give private sector banks a competitive edge and open up new
business opportunities while also extending the authority of supervisors and central banks to
safeguard the financial system and control the risks associated with specific financial
institutions. Given that it impacts every economic sector, climate change is likely to pick up
speed and is no longer just seen as an environmental danger. In addition, the banking industry
is facing transitional and physical risks as a result of climate-related hazards.
Tan and Zhu (2022) examined the usefulness of environmental, social, and corporate
governance (ESG) ratings and is frequently connected by researchers and professionals to the
financial success of corporations. Assessing the fundamental connections between corporate
green innovation (CGI) and ESG ratings in underdeveloped nations is one area of substantial
untapped research. It analyses the quasi-natural experiment using data from Chinese A-share
listed companies between 2010 and 2018, based on the 2015 ESG rating provided by the
SynTao Green Finance Agency to analyze how ratings affect CGI. The findings demonstrate
how financial restrictions are lessened and managers' environmental awareness is raised,
mediating the substantial promotion of both the number and quality of CGI through ESG
ratings.

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Hypothesis Formulation
Hypothesis 1 (H1)
H0: There is no significant relationship between the level of green finance investments and
environmental responsibility among financial institutions.
H1: There is a positive and significant relationship between the level of green finance
investments and environmental responsibility among financial institutions.

Hypothesis 2 (H2)
H0: The strength of the regulatory environment does not significantly impact the sustainable
development practices of financial institutions.
H2: A strong regulatory environment positively influences the sustainable development
practices of financial institutions.

Hypothesis 3 (H3)
H0: There is no significant association between the extent of csr and the level of environmental
responsibility in financial institutions.
H3: Financial institutions with a higher degree of csr integration are more likely to exhibit a
greater level of environmental responsibility.

Hypothesis 4 (H4)
H0: There is no significant relationship between the innovation in financial products and the
overall sustainable development impact of financial institutions.
H4: Financial institutions that embrace innovative financial products are more likely to
contribute positively to sustainable development.

RESEARCH METHODS
A quantitative cross-sectional study design is used in the research to look at the correlations
between important factors. A quick examination of the relevant variables across a wide range
of financial institutions is made possible by this approach. The goal of the research is to shed
light on how green finance investments, the regulatory landscape, corporate social
responsibility (CSR), and financial product innovation affect financial institutions'
commitment to sustainable development and environmental responsibility. To choose a
representative sample of 500 financial representatives, random selection will be used.

Data Collection
Surveys and structured questionnaires will be sent to the financial institutions. Through the use
of these instruments, quantifiable data on investments in green finance, opinions on regulatory
frameworks, corporate social responsibility (CSR), innovation in financial products,
environmental responsibility, and sustainable development will be gathered. Ethical rules will
ensure informed consent and confidentiality throughout the data collection process.

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Variables
Dependent Variables
1. Environmental Responsibility
2. Sustainable Development
Independent Variables
1. Green Finance Investments
2. Regulatory Environment
3. Corporate Social Responsibility (CSR)
4. Innovation in Financial Products

Statistical Analysis
Many statistical studies will be performed on the gathered data, including to investigate the
links between variables, use correlation analysis. T-tests are used to evaluate significant
differences and compare means. Regression analysis is used to assess the importance and
strength of correlations. descriptive statistics to give a general picture of the features of the
sample. The goal of this thorough statistical research is to provide light on the intricate
interactions that exist between CSR, regulatory frameworks, innovation, green finance
systems, and financial institutions' commitment to sustainable development and environmental
responsibility.

ANALYSIS RESULTS
Sample of Respondens
Table 1 presents a comprehensive demographic profile of the participants in our research,
elucidating crucial attributes such age, gender, educational background, monthly earnings, job
title, work history, and degree of environmental consciousness. When it comes to age
distribution, 40,6 percent of the sample, or the bulk of respondents, are between the ages of 26
and 35. The next large group, which makes up 35% of the responses, is people in the 36–45
age range. It is interesting that the age groups in our sample are divided pretty equally, with 9
percent of the sample falling into the 18–25 age group, 76% falling into the 46–55 age group,
and 7,8% falling into the 56+ age group. Regarding gender, 32,6 percent of the respondents in
our sample are female, and 67,4 percent of the total are male.
The respondents' educational backgrounds show that they are a well-educated sample;
43,6% of them have either a bachelor's or master's degree (36,6 percent). 10,8 percent of the
surveyed group hold a doctorate or professional degree, indicating a high level of academic
attainment. Nine percent of respondents said they only completed high school or less in terms
of education. According to the monthly income distribution, 42,6 percent of respondents fell
within the less than 25,000 and 25,000 - 50,000 income ranges, which is a sizable component
of the sample (43,4 percent). The respondents' different economic backgrounds are shown by
the diversity of income levels, which includes the groups of 50,001 - 75,000, 75,001 - 100,000,
and more than 100,000. When looking at the jobs that respondents held, the category of Chief
Financial Officers (CFOs) makes up the greatest portion of the sample, accounting for 26% of
the total. According to the report, there is a preponderance of mid-level finance professionals:
25,6 percent are Finance Managers and 37,2 percent are Financial Analysts. With 25,4 percent
identifying as Novice, 54,2 percent as Intermediate, and 20,4 percent as Advanced, the

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respondents' experience levels are evenly spread. Respondents indicated varying degrees of
environmental awareness: 42,4 percent identified as high, 44,4 percent as moderate, and 13,2
percent as low.
Table 1. Demographic Information
Category Frequency Percentage
18-25 years 45 9,0
26-35 years 203 40,6
Age 36-45 years 175 35,0
46-55 years 38 7,6
56 and above 39 7,8
Male 337 67,4
Gender
Female 163 32,6
High School or below 45 9,0
Bachelor's degree 218 43,6
Education qualification Master's degree 183 36,6
Doctorate or professional
54 10,8
degree
Less than 25,000 213 42,6
25,000 - 50,000 217 43,4
Monthly Income 50,001 - 75,000 21 4,2
75,001 - 100,000 28 5,6
More than 100,000 21 4,2
Chief Financial Officer
130 26,0
(CFO)
Finance Manager 128 25,6
Position Financial Analyst 186 37,2
Accountant 16 3,2
Investment Analyst 25 5,0
others 15 3,0
Novice 127 25,4
Experience Intermediate 271 54,2
Advanced 102 20,4
Low 66 13,2
Environment Awareness Moderate 222 44,4
High 212 42,4

Descriptive Statistics
Descriptive statistics for the major study variables are shown in table 2, which provide
information about the responses' primary tendencies and variability among the 500
respondents. Regulatory Environment (RE), Green Finance Investments (GFI), Sustainable
Development (SD), Environmental Responsibility (ER), Corporate Social Responsibility
(CSR), and Innovation in Financial Products are some of these characteristics (IFP).
On a scale of 1 to 5, respondents gave Environmental Responsibility (ER) an average
score of 4,0190; with a standard deviation (SD) of 0,74984. The mean score for Sustainable.
Development (SD) is 3,9777; with a standard deviation of 0,74551; which is somewhat lower.
The mean score for Green Finance Investments (GFI) is 3,9587; and the SD is 0,71561. The
mean score for the Regulatory Environment (RE) variable is 3,9967; with a SD of 0,73383.

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The SD is 0,74553 and the mean score is 3,9773 for corporate social responsibility (CSR). The
mean score for Innovation in Financial Products (IFP) is 3,9583; while the standard deviation
is 0,72904.
The descriptive statistics provide insightful information about the replies of the polled
financial professionals, including their core tendencies and dispersion. Positive dispositions
toward environmental responsibility, sustainable development, green finance investments,
regulatory environment, corporate social responsibility, and innovation in financial products
are shown by the comparatively high mean scores across variables in the sample. The standard
deviations give more information by showing how much the participants' responses agreed or
disagreed.

Table 2. Descriptive Statistics

N Mean SD Std. Error Mean
Environmental Responsibility (ER) 500 4,0190 0,74984 0,03353
Sustainable Development (SD) 500 3,9777 0,74551 0,03334
Green Finance Investments (GFI) 500 3,9587 0,71561 0,03200
Regulatory Environment (RE) 500 3,9967 0,73383 0,03282
Corporate Social Responsibility (CSR) 500 3,9773 0,74553 0,03334
Innovation in Financial Products (IFP) 500 3,9583 0,72904 0,03260

Reliability Statistics
Table 3 presents the findings of an internal consistency reliability analysis (Cronbach's Alpha)
for a collection of 36 items. According to reports, the Cronbach's Alpha coefficient is 0,974
overall and rises to 0,975 when standardised items are taken into account. The Cronbach's
Alpha values that have been recorded highlight the instrument's dependability and indicate that
it is a good fit for accurately and consistently collecting the intended construct.

Table 3. Reliability Analysis

Cronbach's Alpha Cronbach's Alpha Based on Standardized Items N of Items
0,974 0,975 36

T-test
The findings of a hypothesis test utilising t-tests for different variables are shown in table 4.
For every variable, the test results, computed t-statistics, degrees of freedom (df), and
corresponding p-values (Sig. 2-tailed) are provided. Interestingly, every p-value is very near to
zero, indicating that the observed mean differences are very statistically significant. As a
measure of the discrepancy between the observed and predicted means under the null
hypothesis, the t-values are consistently high.
This suggests a significant departure from the zero values of the null hypothesis. The
95 percent confidence intervals surrounding the mean differences offer valuable information
about the precision and extent of these discrepancies. All things considered, these findings
indicate that the variables that are being examined—which include corporate social
responsibility, sustainable development, green finance investments, environmental
responsibility, and regulatory environment show statistically significant deviations from the
values of the null hypothesis.

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Table 4. T-test
Test Value = 0
95% Confidence Interval
t df Sig. (2-Tailed) Mean Difference of the Difference
Lower Upper
ER 119,849 499 0,000 4,01900 3,9531 4,0849
SD 119,306 499 0,000 3,97767 3,9122 4,0432
GFI 123,697 499 0,000 3,95867 3,8958 4,0215
RE 121,783 499 0,000 3,99667 3,9322 4,0611
CSR 119,292 499 0,000 3,97733 3,9118 4,0428
IFP 121,408 499 0,000 3,95833 3,8943 4,0224

Relationship between Environmental Responsibility and Green Finance Investments (H1)

Table 5 presents the Pearson correlation coefficients between two variables: Green Finance
Investments (GFI) and Environmental Responsibility (ER). With values ranging from -1 to 1,
the correlation coefficient measures the magnitude and direction of the linear link between two
variables. The Pearson correlation value in this instance is 0,845; which is noticeably strong
between ER and GFI. As might be predicted, a correlation of 1,000 along the diagonal denotes
a perfect correlation between each variable and itself. There is a significant positive association
between ER and GFI, as indicated by the off-diagonal correlation of 0,845. This implies that
there is a strong propensity for green finance investments to rise along with the degree of
environmental responsibility, and vice versa.
Table 5. Correlation Analysis on H1
ER GFI
ER 1,000 0,845
Pearson Correlation
GFI 0,845 1,000

The findings of a regression model's analysis of variance (ANOVA) are shown in table
6. The regression model has a p-value of 0,000 and an extraordinarily high F-statistic of
1240,095; indicating that it is highly significant with a sum of squares of 200,181 and 1 degree
of freedom. This suggests that the regression model's explanatory power over the unexplained
variation is substantial. The residual variance inside the model is represented by the Residual
Sum of Squares (SS), which is 80,389 with 498 degrees of freedom. There are 499 degrees of
freedom and a total sum of squares of 280,570. The importance of the regression model in
explaining the variability in the dependant variable is strongly supported by this ANOVA table
6. These results highlight the critical role that green finance investments play in encouraging
environmental responsibility in financial institutions and highlight the relationship between
sustainable practises and financial strategies.
Table 6. ANOVA Result on H1
Model SS df MS F Sig.
Regression 200,181 1 200,181 1240,095 0,000
1
Residual 80,389 498 0,161
Total 280,570 499
SS- Sum of squares, MS- Mean square

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Relationship between Sustainable Development and Regulatory Environment (H2)

The pearson correlation coefficients between the Regulatory Environment and Sustainable
Development (SD) are shown in table 7. (RE). As one might anticipate, a perfect correlation
between every variable and itself is shown by a correlation coefficient of 1,000 along the
diagonal. There is a significant positive connection between SD and RE, as indicated by the
off-diagonal correlation of 0,836. This suggests that there is a significant tendency for a good
impression of the Regulatory Environment to rise with the degree of Sustainable Development
and vice versa.
Table 7. Correlation Analysis on H2
SD RE
SD 1,000 0,836
Pearson Correlation
RE 0,836 1,000

The results of an ANOVA for a regression model are shown in table 8. In this instance,
the regression sums of squares with one degree of freedom, 193,814, is displayed by this model,
which evaluates the connection between the variables. 193,814 is the mean square, which is
calculated by dividing the total of squares by the degrees of freedom. The regression model is
statistically significant, as indicated by the remarkably high associated F-statistic of 1155,646.
The model's relevance is confirmed by the stated p-value (Sig.) of 0,000. With 498 degrees of
freedom, the residual sum of squares is 83,520, which indicates unexplained variation. With
499 degrees of freedom, the total sum of squares is 277,334. The high F-statistic and low p-
value indicate that, in general, the ANOVA findings strongly support the importance of the
regression model.
Table 8. ANOVA Result on H2
Model SS df MS F Sig.
Regression 193,814 1 193,814 1155,646 0,000
1
Residual 83,520 498 0,168
Total 277,334 499

Relationship between Environmental Responsibility and Corporate Social Responsibility

(H3)
The pearson correlation coefficients between corporate social responsibility (CSR) and
environmental responsibility (ER) are shown in table 9. (CSR). A perfect connection between
any two variables is shown by a correlation coefficient of 1,000 along the diagonal. ER and
CSR are significantly positively correlated, as seen by the off-diagonal correlation of 0,758.
This implies that there is a discernible trend for a higher degree of integration of Corporate
Social Responsibility to rise with an increase in Environmental Responsibility, and vice versa.
Table 9. Correlation Analysis on H3
ER CSR
ER 1,000 0,758
Pearson Correlation
CSR 0,758 1,000

Table 10 displays the findings of a regression model's analysis of variance (ANOVA),

which looks at the connection between the variables. With one degree of freedom, the
regression sum of squares in this case is 161,017, resulting in a mean square of 161,017. The

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regression model is highly significant according to the high F-statistic of 670,726 and the
significantly low p-value (Sig. = 0,000). This implies that, in comparison to the unexplained
variation, the variance explained by the model is significant. With 498 degrees of freedom, the
residual sum of squares, or 119,552, represents the unexplained variance in the model. There
are 499 degrees of freedom and a total sum of squares of 280,570. As seen by the high F-
statistic and the extremely low p-value, the ANOVA findings, in summation, significantly
support the importance of the regression model.
Table 10. ANOVA Result on H3
Model SS df MS F Sig.
Regression 161,017 1 161,017 670,726 0,000
1
Residual 119,552 498 0,240
Total 280,570 499

Relationship between Sustainable Development and Innovation in Financial Products

(H4)
The pearson correlation coefficients between innovation in financial products and sustainable
development (SD) are shown in table 11. (IFP). A complete connection between each variable
and itself is shown by a correlation coefficient of 1.000 along the diagonal. A strong positive
correlation exists between SD and IFP as indicated by the off-diagonal correlation of 0,767.
This suggests that there is a discernible tendency toward greater levels of innovation in
financial products when sustainable development levels rise, and vice versa.
Table 11. Correlation Analysis on H4
SD IFP
SD 1,000 0,767
Pearson Correlation
IFP 0,767 1,000

The findings of a regression model's analysis of variance (ANOVA), which looked at

the connection between the variables, are shown in table 12. With one degree of freedom, the
regression sum of squares is 162,965, which yields a mean square of 162,965. The regression
model is highly significant, as evidenced by the high F-statistic of 709,598 and the substantially
low p-value (Sig. = 0,000). This implies that, in comparison to the unexplained variation, the
variance explained by the model is significant. With 498 degrees of freedom, the residual sum
of squares, or 114,369, represents the unexplained variance in the model. 277,334 is the sum
of all squares with 499 degrees of freedom. As seen by the high F-statistic and the extremely
low p-value, the ANOVA findings, in summation, significantly support the importance of the
regression model.
Table 12. ANOVA Result on H4
Model SS df MS F Sig.
Regression 162,965 1 162,965 709,598 0,000
1
Residual 114,369 498 0,230
Total 277,334 499

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Discussion
In order to comprehend the complex linkages that exist inside financial institutions regarding
green finance investments, regulatory settings, CSR integration, and the adoption of novel
financial products, the study examined four main assumptions. First, the study showed strong
support for Hypothesis 1, pointing to a considerable and positive correlation between financial
organisations' environmental responsibility and their degree of green finance investments. This
research emphasises how important financial support for sustainable projects is in encouraging
environmental responsibility. Furthermore, there was a lot of empirical evidence to support
Hypothesis 2, which states that sustainable development practises are positively impacted by a
robust regulatory framework. The regression analysis's high degree of statistical significance
highlights the importance of external regulatory considerations and suggests that sustainable
growth strategies within financial institutions are greatly aided by a supportive regulatory
environment.
The results of the study supported Hypothesis 3, which examined the relationship
between environmental responsibility and CSR integration. The positive connection highlights
the comprehensive nature of corporate responsibility activities in the financial industry by
suggesting that financial organisations with higher levels of CSR integration are also more
likely to demonstrate a higher level of environmental responsibility. The fourth and final
hypothesis said that financial institutions that use cutting-edge financial products have a higher
chance of favourably influencing sustainable development. The study's findings highlight the
importance of innovation and indicate that organisations that adopt cutting-edge financial
solutions typically have a closer alignment with goals related to sustainable development.
In conclusion, the study's conclusions offer insightful information on the intricate
interactions that exist between financial tactics and social and environmental responsibility.
The positive correlations that have been found highlight the potential of financial institutions
to be key players in the advancement of sustainability. This includes not only making
investments specifically in green finance, but also adhering to regulations, integrating CSR,
and developing innovative financial products. The comprehension of how financial institutions
might successfully support sustainable development goals is expanded by these findings.

CONCLUSION
To sum up, this cross-sectional study sheds light on the complex relationships that exist
between sustainable development and green finance methods in encouraging financial firms to
take an environmental duty. The strong and positive correlation between green finance
investments and environmental responsibility highlights how important financial support is in
encouraging environmentally friendly behaviour. Furthermore, the research substantiates the
impact of a robust regulatory framework on sustainable development methodologies, providing
valuable perspectives for policymakers who aim to mould ecologically aware conduct in the
finance industry.
The results underscore the significance of a comprehensive approach to business
operations and the critical role that Corporate Social Responsibility (CSR) integration plays in
improving environmental responsibility. Furthermore, the favourable association shown
between the adoption of pioneering financial goods and advancements in sustainable
development implies opportunities for financial establishments to synchronise innovation with
ecological goals. The aforementioned implications highlight the possibility of financial
institutions taking the lead in promoting environmental responsibility and wider sustainable
development objectives. This could lead to a reassessment of strategies and policies within the
financial sector in anticipation of a future with greater environmental consciousness.

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Implication
The cross-sectional study has important ramifications for policymakers and financial
institutions alike by looking at how green financing and sustainable development mechanisms
interact to promote environmental responsibility. The degree of green finance investments and
environmental responsibility have been found to positively and significantly correlate, which
highlights the critical role that financial commitment plays in encouraging environmentally
conscious behaviour. Given the possible benefits to sustainable development, financial
institutions eager to uphold their environmental responsibilities ought to think about investing
more in green projects.
The premise that a robust regulatory framework has a favourable impact on sustainable
development practises is validated by the study, highlighting the significance of regulatory
frameworks in influencing the environmental behaviour of financial institutions. Using this
knowledge, regulators and policymakers may create and execute laws that encourage and
mandate environmentally friendly practises in the banking industry, supporting more general
environmental objectives. Furthermore, there are important ramifications for business
operations from the discovery that financial institutions that integrate Corporate Social
Responsibility (CSR) more deeply are more likely to demonstrate better environmental
responsibility. This implies that encouraging environmentally conscious conduct in financial
institutions can be facilitated by a comprehensive approach to corporate responsibility that
takes into account both social and environmental factors.
The study demonstrates the potential synergy between financial innovation and
environmental responsibility by demonstrating the beneficial association between adopting
new financial solutions and contributions to sustainable development. Financial institutions
may be able to innovate financial solutions that support environmental aims and hence
contribute significantly to sustainable development goals. Therefore, this study's findings
highlight how complex it is to motivate environmental responsibility in the finance industry.
These results may be used by stakeholders, financial institutions, and policymakers to create
strategies, policies, and practises that support environmental sustainability as a whole while
also being in line with sustainable development and environmental responsibility.

Declarations
Funding
On Behalf of all authors the corresponding author states that they did not receive any funds for
this project.

Conflicts of Interest
The authors declare that we have no conflict of interest.

Competing Interests
The authors declare that we have no competing interest.

Data Availability Statement

All the data is collected from the simulation reports of the software and tools used by the
authors. Authors are working on implementing the same using real world data with appropriate
permissions.

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