What Drives Banks to Provide Green Loans? Corporate Governance and Ownership Structure Perspectives of Vietnamese Listed Banks

Ariful Hoque (), Duong Thuy Le and Thi Le
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Ariful Hoque: School of Business, Murdoch University, Murdoch, WA 6150, Australia
Duong Thuy Le: School of Business, Murdoch University, Murdoch, WA 6150, Australia
Thi Le: School of Business, Murdoch University, Murdoch, WA 6150, Australia

Risks, 2024, vol. 12, issue 9, 1-23

Abstract: This study delves into the influence of banks’ governance and ownership structures on green lending. To examine this, we utilized the two-step system GMM and PCSE methods on the panel data of Vietnamese commercial banks spanning from 2010 to 2023. The findings suggest that board characteristics, precisely board size, board independence, and gender diversity, play a significant role in encouraging banks to provide green credit. The study highlights the importance of ownership structure in green lending. Banks with a high percentage of government ownership tend to fund more green projects, while foreign counterparts are reluctant to fund green finance. A mechanism test is also conducted to point out that banks’ disclosure of their green loan commitments is an influential channel whereby corporate governance and ownership structure impact green loans. Additionally, this research finds that the issuance of the Green Loan Principles in 2018 can facilitate banks’ governance of sustainable lending.

Keywords: bank governance; ownership structure; green loans (search for similar items in EconPapers)
JEL-codes: C G0 G1 G2 G3 K2 M2 M4 (search for similar items in EconPapers)
Date: 2024
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