The Impact of Green Banking on the Financial Performance of Vietnamese Commercial Banks

Abstract

Climate change and environmental issues have become global challenges, driving the trend of green banking development towards the goal of sustainable growth in the banking sector. This paper analyzes the impact of green banking on the financial performance of commercial banks in Vietnam, using the Feasible Generalized Least Square (FGLS) regression method on a dataset from the financial statements and annual reports of 20 commercial banks during the period 2017–2023. We find that green banking (NHX) has a positive impact on financial performance when implementing green credit (GRF) and complying with green disclosure (GCR). Green banking has a negative impact on financial performance when implementing green costs (GRC). These results imply that Vietnamese commercial banks need to increase the implementation of green banking through green credit and compliance with green disclosure, and improve the efficiency of green banking implementation through green costs to reduce the negative impact on financial performance.