Fostering Financial Development for Social Sustainability: An Evidence from G7 Countries
Keywords:
Financial Development, Social Sustainability, G7 Countries, System GMMAbstract
This study investigates the impact of financial development (FD) on social sustainability within the context of G7 countries from 2000 to 2023. Using the IMF’s multidimensional Financial Development Index and a newly constructed Social Sustainability Index (SSI) based on key indicators such as GDP per capita, Gini index, life expectancy, poverty, and employment ratio, the research employs a dynamic panel data model using the System GMM estimator. The findings reveal a significant and positive effect of FD on social sustainability, indicating that advanced and inclusive financial systems promote social equity, reduce poverty, and enhance overall well-being. Government effectiveness also contributes positively to SSI, whereas unemployment and population density exhibit negative impacts. Education, though positively associated, shows no statistically significant influence. These results underscore the importance of integrating financial sector reforms, effective governance, and inclusive policies in advancing social sustainability in developed economies.
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