Green Credit and Bank Financial Performance: Exploratory Evidence from Eight Vietnamese Commercial Banks, 2022-2024

Abstract

This exploratory study examines the association between green credit and the financial performance of eight Vietnamese commercial banks over the 2022-2024 period. The balanced panel comprises 24 bank-year observations compiled from the financial statements, annual reports, sustainability reports, and ESG disclosures of BIDV, Vietcombank, LPBank, MB, SHB, MSB, Techcombank, and VPBank. Financial performance is measured by return on assets (ROA), while green credit is proxied by the ratio of outstanding green loans to total outstanding loans (GCR) and the logarithm of outstanding green loans (LogGCO). The pooled OLS results indicate that GCR has a positive and statistically significant coefficient across all three specifications, whereas LogGCO is not statistically significant. In the parsimonious model, the non-performing loan ratio and financial leverage have negative and statistically significant coefficients in relation to ROA. The VIF test for the parsimonious model does not indicate serious multicollinearity; the White test fails to reject the null hypothesis of homoskedasticity; and the Wooldridge test fails to reject the null hypothesis of no first-order serial correlation at the 5% level, although p = 0.0501 is very close to the threshold. The findings should be interpreted as exploratory evidence of statistical associations rather than causal effects. The study suggests that the development of green credit should be accompanied by effective risk control, data standardization, and transparent reporting.