Green Finance Accessibility and Sustainable Economic Development: The Roles of Financial Literacy, Green Investment Capability, and Institutional Support (Journal of Economic Education and Entrepreneurship Studies)

Summary

• A survey of 300 MSME owners or managers was analysed with PLS-SEM, and all eight tested direct paths were positive and statistically significant.p.1
• Financial literacy and institutional support explain 26.2% of the variation in green financing accessibility, while the model explains 37.9% for green investment capability and 33.9% for sustainable economic development.p.12
• Green investment capability has the largest direct effect on sustainable economic development (β = 0.334), followed by green finance accessibility (β = 0.228) and institutional support (β = 0.147).p.16
• Green financing accessibility has a positive effect on green investment capability (β = 0.394).p.16
• The indirect path from green financing accessibility through green investment capability to sustainable development has a coefficient of 0.132.p.16
• Micro businesses dominated the sample with 166 businesses (55.3%).p.9

Key insights

1. Access to green financing remains a challenge for MSMEs seeking to make environmentally friendly investments.p.1
2. Financial literacy is positively and significantly related to the accessibility of green financing for MSMEs.p.17
3. Institutional support is positively linked to sustainable economic development (β = 0.147).p.16
4. The sequential path from financial literacy through accessibility and investment capability to sustainable development has an indirect coefficient of 0.040.p.16
5. Access to capital does not guarantee investment quality, so green financing should be combined with investment competency development.p.19
6. The explanatory power of the model is classed as weak for all three endogenous variables.p.13
7. The cross-sectional design and purposive sampling limit causal conclusions and generalisability.p.23