Determinants of green credit efficiency efficiency of banks in Vietnam

Abstract

This study measures green credit efficiency and analyzes its influencing factors among Vietnamese banks from 2019 to 2023. Building upon the green credit efficiency measurement approaches at the bank level proposed by Deng et al. (2022) and Pan et al. (2023), we employ the Data Envelopment Analysis (DEA) method. In addition, the Feasible Generalized Least Squares (FGLS) method is used to estimate the model examining the determinants of green credit allocation effectiveness. The results reveal that profitability, state ownership, bank size, and years of operation positively influence the effectiveness of green credit allocation. Conversely, foreign ownership and inflation exhibit negative effects. Economic growth and the COVID-19 pandemic show no statistically significant impact. Based on these findings, this study proposes several recommendations to promote green credit activities within the Vietnamese banking system, aiming toward sustainable growth