<p>The motivation for our research stems from the growing importance of environmental, social, and governance (ESG) performance in shaping stock market dynamics, particularly its role in enhancing stock liquidity through risk mitigation and increased transparency. While ESG performance is increasingly recognized as a key factor in improving stock liquidity, the moderating influence of financial development on this relationship remains underexplored. This study aims to fill this gap by investigating how varying levels of financial development amplify or weaken the ESG–stock liquidity nexus in emerging Asian economies. We used data from seven emerging Asian economies over the period 2011–2022 and applied fixed-effects regression and instrumental variable two-stage least squares (IV2SLS) for empirical analysis. Our findings demonstrated a significant positive influence of ESG performance on stock liquidity, with stronger effects observed in firms with higher ESG engagement, as indicated by quartile analysis. The positive impact of ESG performance on stock liquidity was mediated through risk mitigation and increased analyst coverage. Moreover, the study revealed that financial development significantly moderates this relationship, with greater financial development amplifying the positive effect of ESG performance on stock liquidity. These results remained robust across different countries, as did alternative stock liquidity measures and estimation methods. Our research provides valuable policy implications for policymakers and investors in emerging Asian economies by identifying the conditions under which ESG performance most effectively enhances stock liquidity. By understanding how financial development strengthens the ESG–stock liquidity relationship, stakeholders can implement targeted strategies to optimize market liquidity and increase firm value.</p>