Financial system improvement towards the sustainable production and consumption goal: the moderating effect of institutional quality

Abstract

Sustainable development is processes of changes in which resource exploitation, investment, technological and institutional development orientation, all changes must be in harmony to ensure current potential as well as as the future to meet human needs and aspirations in economic, social and environmental aspects. Sustainable Production and Consumption (SPC) is one of the seventeen sustainable development goals announced by the United Nations (SDGs 12). This study determines the impact of financial development and institutional quality on the goal of SPC. Based on data from 150 countries from 2010 to 2021, the authors performed System - Generalized Method of Moments (S-GMM) estimation to overcome the model's defects. The results indicate that financial development has a negative effect on SPC, whereas, institutional quality is not only a factor that has a directly positive impact on SPC, but also a positive moderating variable for the financial development - SPC nexus. The research results demonstrate high reliability and can serve as a basis for policy implications