International Journal of Sustainable Economy (16 papers in press)

Regular Issues

• Modelling sustainability challenges and opportunities for microfinance institutions in the Arab region  
  by Nahil Saqfalhait, Mohammad W. Alomari, Abdullah AlGhazali, Omar M. Alzoubi 
  Abstract: This study aims to develop a two-step approach for assessing the sustainability of 27 Microfinance Institutions (MFIs) in nine Arab countries during the years from 2010 to 2018. The first step applies the Technique for Order Preference by Similarity to Ideal Solution (TOPSIS) approach to develop MFIs’ sustainability scores, considering the financial and social performance dimensions. The second step investigates how firms-level factors and macroeconomic performance may influence the sustainability of these institutions, utilizing the dynamic panel data regression models GMM and FM-OLS. Our findings reveal that over the period the overall sustainability of MFIs increased steadily from 55 to 81 percent, while the average threshold of the microfinance industry was 66 percent. Our empirical analyses demonstrate that profitability and outreach have positively influenced MFIs’ sustainability. In contrast, higher financial leverage and administrative costs and GDP growth may hurt their sustainability in the long run.
  Keywords: microfinance institutions; MFIs; sustainability challenges; sustainability opportunities; TOPSIS; panel GMM analysis.
  DOI: 10.1504/IJSE.2026.10071061
   
  
• Time-frequency volatility connectedness between clean energy and commodity markets: implication for portfolio diversification under crises  
  by Mourad Mroua, Wafa Abdelmalek, Molka Khemakhem 
  Abstract: This study employs the TVP-VAR-based frequency connectedness approach to examine the volatility connectedness between regional and sectoral clean energy markets and commodity markets from January 2020 to April 2024, focusing on the COVID-19 pandemic, the Russia-Ukraine conflict, and the Israel-Palestine war. Our findings reveal that market connectedness is time-varying and significantly intensifies during extreme events, particularly during the COVID-19 pandemic. Furthermore, our findings demonstrate that long-term components predominantly drive this connectedness. While the American clean energy market serves as the primary net transmitter of volatility shocks, the Asian clean energy market consistently acts as a net receiver. Additionally, the minimum connectedness portfolio analysis suggests that incorporating clean energy and commodity assets into a portfolio effectively mitigates the risk associated with energy commodities. These key findings offer valuable insights for investors in optimizing portfolio asset allocation involving clean energy and commodity markets during crises. Moreover, they provide policymakers with crucial guidance for developing policies aimed at fostering the growth of the clean energy market.
  Keywords: clean energy; commodities; TVP-VAR frequency; minimum connectedness portfolio; COVID-19; Russia-Ukraine conflict.
  DOI: 10.1504/IJSE.2026.10071693
   
  
• Impact of income inequality on environmental quality: the role of urbanisation and government behaviour  
  by Siyuan Liu, Saifuzzaman Ibrahim, Lee Chin 
  Abstract: The aim of this study is to examine the impact of income inequality on environmental quality. Furthermore, the study focuses on the moderating influence of urbanisation and government behaviour in this relationship. The study collects data from 142 countries between 2010 and 2019 and then experimentally analyses it using the generalised method of moments (GMM). The findings provide three significant insights. First, exacerbating income inequality will lead to a decline in environmental quality. Second, there is a significant moderating effect of both urbanisation and government behaviour. Additionally, the results of the heterogeneity analysis show that only in high-income countries does income inequality significantly decrease environmental quality. Based on these findings, the government should consider the issue of income inequality when formulating environmental protection policies. Specifically, the government can promote income equity through tax policies and redistribution systems, thereby effectively improving environmental quality. In addition, the government should strengthen the planning and management of the urbanisation process and mitigate the negative impact of income inequality on environmental quality through reasonable government behaviours.
  Keywords: income inequality; environmental quality; government behaviour; urbanisation; moderating effect; generalised method of moments; GMM; cross-national panel data.
  DOI: 10.1504/IJSE.2026.10071947
   
  
• The impact of skewed income distribution on environmental degradation: a nonlinear analysis of India  
  by Mohd Arshad Ansari, Kashif Mansoor, Muhammed Ashiq Villanthenkodath, Kuldeep Singh Nagi, Faraz Khan 
  Abstract: This study aims to analyse the asymmetric effect of income disparity on carbon dioxide emissions along with the other explanatory variables such as poverty, per capita gross domestic product and human capital in India over the data from 1995-2021. Using the nonlinear autoregressive distributed lag (NARDL) approach, the study found that the positive shock in income inequality positively influences carbon dioxide emissions and vice-versa. In contrast, the positive shock in income inequality is not statistically significant towards emissions, while the negative shock is negative and significantly linked with carbon dioxide emissions in the short run. Hence, these findings are the blueprint for policymakers to frame policies regarding these factors to attain sustainability.
  Keywords: income inequality; environmental degradation; NARDL; India.
  DOI: 10.1504/IJSE.2026.10072446
   
  
• Asymmetric effect of remittances on economic growth: a sectoral analysis in Nigeria  
  by Taiwo Akinlo, James Temitope Dada, Mosab I. Tabash, Mamdouh Abdulaziz Saleh Al-Faryan 
  Abstract: Nigeria receives the most remittances in Sub-Saharan Africa and ranks among the top ten globally. The government needs to capitalise on this increase in remittance inflows to promote economic growth and diversification across various sectors of the economy. Therefore, this study examines the asymmetric impact of remittances on aggregate output and sectoral growth in Nigeria from 1980 to 2022, employing both the linear and NARDL approaches. The study found that the relationship between remittances and sectors is asymmetric, except for the construction sector, which exhibits a symmetric relationship with remittance inflow. The study found that an increase in remittances benefits the economic growth, agricultural, trade, and transport sectors, while the manufacturing sector does not respond to remittance shocks. Finally, the study found that the negative shock from remittances is harmful to economic growth and the service sector. Therefore, it is expected that policymakers will introduce and implement policies to ensure the smooth inflow of remittances, promoting steady economic growth and sectoral development.
  Keywords: capital inflow; remittances; economic growth; asymmetric; real sector; agriculture; service; manufacturing; transportation; construction; Nigeria.
  DOI: 10.1504/IJSE.2026.10073647
   
  
• Triggering Sustainable Competitiveness through Institutional Quality: how Human Capital and Digitalisation Change This Game  
  by Tomáš Fišera, Bernard Vaní?ek 
  Abstract: Understanding the interplay between institutional quality, digitalisation and human capital is crucial for fostering sustainable competitiveness, particularly in light of recent global challenges. However, they are often studied separately, and there is a lack of comprehensive studies examining their interaction. This study fills this gap by analysing their direct and mediating effects in 24 EU countries (2017-2022) using PLS-SEM. While institutional quality increases digitalisation and human capital, human capital alone does not enhance sustainable competitiveness or mediate this relationship. The findings emphasise the importance of investing in digital infrastructure and institutions to better utilise human capital for more sustainable competitiveness.
  Keywords: Sustainable competitiveness; Institutional quality; Digitalization; Human capital; PLS-SEM.
  DOI: 10.1504/IJSE.2026.10074437
   
  
• Measuring the sustainable human development: evidence from different income-grouped countries using panel data  
  by Souvik Dey 
  Abstract: This scientific study develops a comprehensive framework for measuring Sustainable Human Development by analysing the interaction between human development and sustainability indicators across economies of varying income levels. Using Two-Stage Least Squares (2SLS) and multilayer canonical correlation analysis, the research addresses endogeneity concerns and identifies key sustainability factors such as internet access in schools, HIV infection rates, universal health coverage, clean cooking fuel usage, and electricity access - as critical drivers of human development. The comparison between the Human Development Index (HDI) and the proposed Sustainable Human Development Index (SHDI) reveals disparities: low-income countries show a significant lag in SHDI, middle-income countries demonstrate moderate convergence, and high-income countries exhibit high HDI but lower SHDI due to environmental costs. It can be stated that the Sustainable Human Development Index (SHDI) is a comprehensive measurement of progress than the HDI, observing the hidden gaps and emphasizing the importance of balanced development that combines economic growth with long-term social sustainability.
  Keywords: sustainability; human development index; HDI; endogeneity; two-stage least squares; 2SLS; canonical correlation; sustainable human development indicators.
  DOI: 10.1504/IJSE.2026.10075193
   
  
• Dynamic relationship between climate policy uncertainty and inflation: a time-varying Granger causality approach  
  by Opeoluwa Adeniyi Adeosun, Suhaib Anagreh, Mosab I. Tabash 
  Abstract: The study investigates the predictive relationship between US climate policy uncertainty (CPU) and four key components of inflation (energy, food, headline, and official core) utilising the rolling-window and recursive-evolving algorithms versions of Shi et al.’s time-varying Granger approach. Findings show that the CPU provides information about the future values of headline, core, and food inflation, and all inflation components exert significant predictive powers on the CPU, implying bidirectional relationships. The paper date-stamps significant periods of significant predictability, aligning with main climate-related events such as Kyoto Protocol debates, US-China climate deal, the UN climate action summit, and the Environmental Protection Agency’s GHG emissions standards. The findings are robust and consistent with the baseline results when controlling for the influence of economic policy uncertainty in the CPU-inflation nexus. The study recommends incorporating CPU into central banks’ inflation forecasting models, enhancing climate policy communication, supporting climate-resilient economic policies, and strengthening climate-related information practices.
  Keywords: climate; uncertainty; inflation; causality; forecasting; monetary; predictive linkages; non-linearity; date-stamping; policies.
  DOI: 10.1504/IJSE.2026.10075412
   
  
• Role of ESG dimensions in financial performance of Indian firms  
  by Tej Singh , Meera Bamba, Ishwar Sharma, Bharti Verma, Bhawana Verma 
  Abstract: This study examines how ESG dimensions and sub-dimensions affect the financial performance of Indian companies, aiming to highlight their role in driving profitability and guiding investment decisions. Data from Refinitiv and CMIE databases were collected for 99 Indian-listed firms from 2019 to 2023, covering 495 observations. The panel regression analysis found that the overall ESG significantly improves Tobin's Q (TQ). Specifically, the environmental dimension significantly enhances ROE but negatively affects TQ. The social dimension significantly improves both ROE and TQ. The governance dimension negatively and significantly affects ROE but significantly enhances TQ. Among sub-dimensions, the workforce dimension significantly enhances both ROE and TQ, while management score negatively impacts ROE and shareholders' score significantly improves TQ. Companies should prioritise social initiatives, manage environmental investments and adopt balanced governance and structure to enhance financial performance and build investor confidence.
  Keywords: ESG dimensions; sustainability; return on equity; ROE; Tobin’s Q; TQ; financial performance; India.
  DOI: 10.1504/IJSE.2026.10075803
   
  
• Drivers of currency crises in Egypt: a political-economy approach  
  by Mona Hamdy, Mona Fayed, Asmaa Ezzat 
  Abstract: Given Egypt’s history of currency crises, this paper aims to identify the key drivers behind these episodes by focusing on the role of both economic and political-economy variables. Using a probit analysis and annual data over the period (19772021), the findings suggest that real exchange rate overvaluation, declining foreign reserves, falling portfolio investment, and rising external debt are also significant economic predictors for currency crises incidence in Egypt. In addition, the findings indicate that fixed exchange rate regimes, low levels of democracy, and the absence of capital controls significantly increase the likelihood of a crisis. Moreover, it is evident that accounting for these variables, along with the economic indicators, improves the model’s ability to predict currency crises.
  Keywords: currency crises; exchange market pressure index; political economy; probit model; Egypt.
  DOI: 10.1504/IJSE.2027.10075872
   
  
• The path to sustainability: exploring the dynamic influences of ESG factors and economic growth in the GCC region  
  by Mohsen Ayyash 
  Abstract: Sustainable development requires a balanced approach integrating environmental, social, and governance (ESG) factors with economic growth (GDPG). This study investigates the impact of ESG indicators and economic growth on the Sustainable Development Goals Index (SDGI) in Gulf Cooperation Council (GCC) countries. Given the region’s economic dependence on fossil fuels and rapid development, understanding these dynamics is crucial for informed policymaking. Using panel data from the GCC countries between 2002 and 2022, the study employs the pooled mean group autoregressive distributed lag (PMG-ARDL) model to examine short- and long-run relationships. Key findings indicate the positive effects of social factors (SOCF), governance factors (GOVF), and GDPG on SDGI, whereas environmental factors (ENVF) exert a negative influence. These findings highlight the need for policies that mitigate environmental trade-offs while leveraging economic and social development and governance improvements to enhance sustainable development in the region.
  Keywords: sustainability; environmental; social; and governance factors; ESG factors; economic growth; gulf cooperation council region; GCC region.
  DOI: 10.1504/IJSE.2026.10075873
   
  
• R&D and IT investments powering MSME performance for Indian industrial transformation  
  by Barkha Dhingra, Tanu Kathuria, Ruhee Mittal, Mahender Yadav 
  Abstract: MSMEs are integral to India's economy, driving economic and social development through industrial output, job creation, exports, and fostering entrepreneurship. This study examines their performance by integrating research and development (R&D) and information technology (IT) into their business environment, aiming to boost revenue, cut costs, and improve customer engagement through e-business. While existing research often treats micro, small, and medium enterprises as a homogeneous group, this study distinguishes their performance by analysing the specific impacts of key determinants on each segment. This study employs panel data regression to examine the influence of IT and R&D intensity on performance. Results reveal the nuanced relationship between ROA and various factors, highlighting that the technology and innovation positively influence performance, but emphasising the need for tailored industry-specific initiatives. These findings offer valuable insights for policymakers, business leaders, and researchers, facilitating informed decisions on technology investment and fostering innovation guided by resource-based view (RBV).
  Keywords: R&D intensity; IT intensity; capital intensity; panel data; micro; small; and medium enterprises; MSMEs; India.
  DOI: 10.1504/IJSE.2026.10070229
   
  
• Unemployment, GDP and CO₂ emissions: new theoretical foundations and mathematical tools for the analysis of the environmental Phillips curve  
  by Rosa Ferrentino, Luca Vota 
  Abstract: The theoretical and empirical foundations of the environmental Phillips curve, namely, the inverse relationship between air pollution and unemployment, remain unclear. In this manuscript, the authors use an original model to demonstrate that two alternative specifications of such a curve are possible, namely, the difference version (that comprises the first differences of the variables of interest) and the gap version (that includes the difference of the unemployment rate and emissions of CO₂ from their respective equilibrium values). The regression analysis conducted on US time-series proves that, thanks to its ability of taking into account the business cycle fluctuations, the gap version outperforms its difference counterpart. Appropriate policy recommendations are provided and discussed.
  Keywords: environmental economics; environmental Phillips curve; pollution; generalised method of moments; mathematical methods.
  DOI: 10.1504/IJSE.2026.10071632
   
  
• Interconnectedness and portfolio optimisation across global ESG stocks  
  by Ishwar Sharma, Bhawana Verma, Chanchal Saini, Bharti Verma 
  Abstract: This study investigates the connections between global ESG stocks using the TVP VAR extended joint connectedness technique. It employs multivariate portfolio construction methods to determine optimal portfolio weights and evaluates these portfolios using the Sharpe ratio. Analysing daily data from November 2014 to November 2024 shows that interconnectedness surged during key events such as the Paris Agreement, the COVID-19 pandemic, and the Russia-Ukraine war, with the highest peak during the COVID period. The study suggests that diversifying investments exclusively across emerging markets and a combination of developed and emerging markets may offer greater diversification opportunities than investing only in developed markets. To achieve a significant reduction in volatility and an increase in cumulative returns, it is recommended to allocate a substantial portion in the UK for a composite developed and emerging market portfolio, in India for an emerging market portfolio, and in Japan for a developed market portfolio.
  Keywords: connectedness; diversification; developed markets; emerging markets; ESG stocks.
  DOI: 10.1504/IJSE.2026.10069962
   
  
• The impact of economic inequality on fiscal multipliers: do Central and Eastern European countries stand out?  
  by Marko Senekovič, Jani Bekő 
  Abstract: On the sample of 12 Central and Eastern European (CEE) countries - employing a panel VAR and a regression analysis using pre-estimated fiscal multipliers derived from time-series VAR - we investigate the impact of income and wealth inequality on the size of fiscal multipliers. For robustness, we simultaneously test the aforementioned relationship using a broader sample of 47 countries. We emphasise the following findings. First, in CEE countries, fiscal incentives predominantly produce positive output effects. Second, both panel and time-series analyses reveal that higher levels of income inequality are associated with larger fiscal multipliers in both the CEE countries and the broader sample. Third, regarding wealth inequality, the findings indicate mixed results, with some evidence suggesting a potential relationship between greater wealth inequality and higher fiscal multiplier values. Finally, higher levels of public and private debt, along with lower levels of net savings, are linked to larger fiscal multipliers in CEE countries.
  Keywords: fiscal policy; economic inequality; panel VAR; CEE countries.
  DOI: 10.1504/IJSE.2026.10070368
   
  
• Impact of sustainability quality on ASEAN firms' value  
  by Josua Tarigan, Angela Novianti Pranoto, Saarce Elsye Hatane, Ming-Lang Yeh 
  Abstract: This study investigates the impact of quality sustainability assurance (QSA) and sustainability performance (SP) on firm value, using panel data from 190 firm-year observations across 2019-2023. It also examines SP as a moderating variable in the relationship between QSA and firm value. The research highlights the significance of robust sustainability practices in enhancing corporate value, particularly in ASEAN's evolving sustainability landscape. Utilising the weighted least squares, the results also show the importance of having the quality of sustainability reporting consistent with actual SP. Profitability, asset size, and leverage-control measures also reveal expected effects on firm value. This shows how QSA and SP jointly affect firm valuation, stressing the need for companies to not only credibly report their sustainability efforts but also deliver significant SP. By this value proposition, regulators and stakeholders must prioritise assurance quality improvement and meaningful practices for sustainability in the corporate sector.
  Keywords: quality sustainability assurance; QSA; sustainability performance; SP; firm valuation.
  DOI: 10.1504/IJSE.2026.10070629