The impact of green credit on air pollution and bank performance – a sustainable financial solution from the case of china and lessons for Vietnam

Abstract

This study aims to analyze the relationship between green credit, air pollution and financial performance in Chinese commercial banks. The authors applied foundational theories such as the Stakeholder Theory, Competitive Strategy Theory, Environmental Risk Management Theory and the Liberal Model, the research employs a quantitative approach. Data includes 182 observations from 26 commercial banks in China during 2017–2023, with key variables such as ROA, ROE, CIR, Green Credit and Air Pollution analyzed using STATA 17.0. Results reveal an assured relationship between green credit and bank financial performance, alongside a negative impact of air pollution on performance. Notably, the study highlights the mediating role of air pollution in linking green credit to bank performance. Green credit not only mitigates air pollution by supporting eco-friendly projects but also indirectly enhances bank performance through sustainable business practices. Thus, these findings provide valuable insights into sustainable finance strategies and environmental management policies in China and offer practical lessons for adopting green credit policies effectively in Vietnam