The impact of sustainability on financial markets: A study on the NASDAQ stock exchange

The concept of sustainability is becoming increasingly important on the national and international agenda. In the meantime, it is broadening its scope and forming the basis for change in many areas of activity. Although this concept is not very old, it can be assumed that environmental degradation and the depletion of energy resources have had a major impact on the recent rise in popularity of this concept. These effects are no longer just observable, but are limiting human life in many ways. As humanity has realised that even greater problems lie ahead, sustainability is one of the most popular phenomena of today. One of the areas where discussions and actions on sustainability are most intense is in the field of economics. In the field of economics, the financial system is one of the most fundamental components of the economy. Based on the knowledge of the concept of sustainability and its impact in today's world, this study aims to examine the concept of sustainability in the financial system. The study attempts to examine the impact of the concept of sustainability on the theory and practise of the financial system by transferring information from academic and sectoral sources as well as analysing asset prices in the financial markets. The study first gathers information from the literature and discusses the interrelationships of the concept of sustainability in economics and finance. The information is drawn from both academic studies and the reports of international organisations active in the field of sustainability, as well as from various channels that have disseminated content on this topic. The study goes on to question the existence of a meaningful relationship between sustainability-related financial investments and other financial investments. In this context, the NASDAQ sector indices and the sustainability indices traded on the NASDAQ exchange were selected as sample variables to analyse the existence of this relationship. Daily price data of these variables for the period 2018-2023 were used for the analysis. Unit root tests were applied to the time series of the variables (ADF-PP-ZA-FADF-FKSS unit root tests). RALS-ADL and RALS-EG2 cointegration tests are used to determine the long-term relationships between the variables. The Cumulative Frequency Fourier Toda-Yamamoto causality test was used to analyse the short-term relationships between the variables. According to the information and findings of the study, the concept of sustainability characterises the product and service processes of the financial system and influences the goals and future plans of financial actors. There are long and short term relationships between sustainability orientated financial investments and traditional financial investments. These results are interpreted as evidence that the concept of sustainability also has an impact on financial markets.