FINANCIAL EDUCATION AND GREEN TRANSITION OF SMALL AND MEDIUM-SIZED ENTERPRISES IN DEVELOPING ASIA

Sustainability and the green transition are critical issues for developing Asia, given their economic potential and large populations. This study explores how financial development and sustainable education impact energy expenditures among SMEs, utilizing an autoregressive distributed lag model with data from ten developing Asian countries spanning 2001–2020. The findings show that a 1% increase in the size of financial markets does not significantly affect SMEs’ energy consumption, suggesting that financial resources may not be effectively directed toward the adoption of energy-efficient technologies. This lack of impact could be due to SMEs prioritizing other business needs, lacking expertise in energy management, or facing insufficient financial incentives. In contrast, a 1% rise in the educated population leads to a reduction in energy consumption by SMEs, with short-term and long-term decreases of 0.32% and 0.37%, respectively. These reductions are attributed to the educated workforce’s ability to implement energy-saving measures. To promote the energy transition, policy recommendations include enhanced financial support, the development of green bonds, the advancement of sustainable education, the standardization of ESG practices and improvements in credit scoring systems to encourage sustainability efforts.