The Impact of Green Crecit on Bank Profitability: Implications for Vietnam

Abstract

In the context of climate change and the global pursuit of sustainable development, green credit has emerged as a strategic instrument enabling banks to foster both economic growth and environmental protection. In Vietnam, although the State Bank has introduced incentive policies to promote green lending, its implementation remains constrained by an incomplete legal framework and dependence on external capital. Addressing the lack of empirical evidence, this study examines the impact of green credit on the profitability of 18 Vietnamese commercial banks from 2015–2023. Using panel data regression in STATA with diagnostic tests for multicollinearity, heteroskedasticity, and autocorrelation, the study finds that green credit ratio (GCR) significantly enhances return on assets (ROA), while non-performing loans (NPL) reduce it. Bank size also shows a positive but weaker effect, whereas GDP growth is insignificant. The findings highlight green credit’s role in sustainable banking and support stronger regulatory and environmental risk management frameworks.