Journal article
What is the role of multilateral development banks in sustainability: Empirical evidence from climate finance at the Asian Development Bank
International review of economics & finance, Vol.111, 105661
2026
Abstract
This research aims to identify the role of climate finance in sustainability by utilizing climate financing data at the Asian Development Bank (ADB), a major regional MDB working in the most populous, dynamic, and sizeable greenhouse gas emissions areas. We employ the GDP per capita and carbon dioxide (CO2) emissions per capita to proxy for economic and environmental sustainability, respectively, of 39 developing countries financed by ADB from 2016 to 2023. We estimate our research models using various econometric methods that are tailored to the features of our data sample, including DOLS, PCSE, bootstrap panel quantile regression, two-step system GMM approaches, and Common Correlated Effects model. We find a significant impact of ADB climate finance on promoting GDP per capita and reducing CO2 emissions in recipient countries.
Nevertheless, this effect varies across the distributional levels of sustainability. Specifically, climate investments are more beneficial to the economic sustainability of lower income countries, while producing greater effects in lowering CO2 emissions in countries with higher emissions.
Additionally, we examine the impact of climate adaptation and mitigation funds on sustainability. The results confirm their significant role in enhancing sustainability, with climate adaptation finance having a greater impact than mitigation financing.
We also decompose ADB climate finance into sovereign and non-sovereign operations to investigate whether they impact sustainability. Our statistics indicate that both financing operations increase the annual GDP per capita; however, sovereign funds have an inverse effect on reducing CO2 emissions. Our findings thus provide valuable policy implications for MDBs in directing their climate finance to their developing member countries.
Details
- Title
- What is the role of multilateral development banks in sustainability: Empirical evidence from climate finance at the Asian Development Bank
- Authors/Creators
- Thuy Duong Le - Murdoch UniversityAriful Hoque - Murdoch Business College, Murdoch University, 90 South St, Murdoch, WA 6150, AustraliaThi Le - Murdoch University
- Publication Details
- International review of economics & finance, Vol.111, 105661
- Publisher
- Elsevier Inc.
- Identifiers
- 991005912982407891
- Copyright
- © 2026 The Authors.
- Murdoch Affiliation
- College of Business
- Language
- English
- Resource Type
- Journal article
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