This study aims to examine the impact of exogenous factors on the environmental performance of banking organizations in Vietnam, including green finance GF, fintech adoption FA, and coip
Reasons for choosing the topic
Sustainability and environmental performance are increasingly vital in the financial sector, as highlighted by researchers and industry practitioners (Lim, 2021) The rise of "green finance" and a focus on environmental performance have emerged as key drivers for industry experts (Dai et al., 2022) In a competitive landscape, global business leaders are prioritizing eco-friendly solutions to secure a competitive edge Banks, both in developed and developing nations, play a pivotal role in combating climate change and promoting environmental sustainability (Dai et al., 2022) The banking industry is adopting various strategies, such as fintech integration, enhancing Corporate Social Responsibility (CSR), and fostering Green Innovation (GI), to improve their operations and boost Environmental Performance (EP) Thus, investigating ways for banking organizations to enhance their EP is crucial.
Banking organizations today are under pressure to improve social responsibility for a positive community image while also tackling the challenges of implementing Green Finance (GF), Fintech Adoption (FA), and Green Innovation (GI) This dynamic environment presents both opportunities and challenges as these organizations seek to effectively integrate green policies, financial management, and social responsibility to enhance sustainable environmental performance.
The integration of social cohesiveness, environmental awareness, and economic growth in a single study is increasingly vital, as highlighted by Hernandez et al (2020) The Social Investment Forum (2014) reports that over 8,000 companies across more than 160 nations are investing significantly in Corporate Social Responsibility (CSR) initiatives.
The significance of Corporate Social Responsibility (CSR) has grown, highlighting the need for businesses to adopt innovative practices that intentionally integrate social, environmental, and economic considerations into their strategies and operations, with an estimated impact of $4 trillion (Hernandez et al., 2020).
The Vietnamese Government is actively promoting sustainable finance development through initiatives like the National Green Finance Strategy for 2021-2030, which envisions achieving 25% green credit in total financial institution lending by 2030 This ambitious goal requires the collaboration of multiple stakeholders, including commercial banks.
Therefore, our research team chose the research topic “A model from green finance for enhancing green innovation and environmental performance of the banking industry”
Objectives and research questions
This study investigates the impact of Green Finance (GF), Corporate Social Responsibility (CSR), Fintech Adoption (FA), and Green Innovation (GI) on the Environmental Performance (EP) of banking organizations, addressing the urgent need for sustainable practices in the financial sector The research aims to explore how these factors contribute to enhancing the environmental outcomes of banks.
• To examine the influence and impact of CSR, GF on EP through the intermediate variable GI.
• Examine the correlation between CSR, FA, GI, GF, and EP.
• Examine the impact of FA on EP through the intermediate variable GI.
This research seeks to address the following four research questions:
• Do CSR and GF have any impact on EP with GI as the mediator variable?
• What is the relationship between CSR, FA, Gl, GF, and EP? Is it positive or negative? Is it one-way or multi-way?
• Does FA have any effect on EP? How will the EP of a banking organization change when affected by the FA factor?
• What financial policies and strategics do leaders and banking organizations in Vietnam need to develop and apply to increase environmental performance?
Object and scope of the research
Object of the research
This study examines the Environmental Performance of banking organizations, highlighting the key factors that influence it, including Governance Framework (GF), Financial Accountability (FA), and Corporate Social Responsibility (CSR) These factors are analyzed across three dimensions: social, economic, and environmental, with Governance Indicators (GI) serving as a mediating variable.
Scope of the research
This study explores the perspectives of employees, department heads, and various positions within commercial banks in Vietnam, particularly in Ho Chi Minh City With their familiarity with "Green Finance," these individuals are anticipated to offer valuable insights The research was carried out from December 2023 to January 2024.
Research Methods
This research utilizes a quantitative approach to improve accuracy, offering precise insights into the extent, frequency, and impact of the investigated variables By leveraging accurate knowledge and evidence, this method significantly aids decision-making The authors created demographic charts of survey participants using Excel, integrating quantitative data with popular analytical tools like SmartPLS, SPSS, R, Python, and Stata for comprehensive analysis Consequently, the choice of a quantitative method over a qualitative one was justified in this study.
The authors employed SmartPLS 4.0 and utilized the Structural Equation Modeling (SEM) method to test the hypotheses of this research SEM is a widely used multivariate statistical tool that helps confirm relationships between latent variables (Hair).
Structural Equation Modeling (SEM) is recognized for its versatility in handling both complex and simple models (Hair Jr et al., 2021) Research indicates that Covariance-Based SEM (CB-SEM) is more effective than Partial Least Squares SEM (PLS-SEM) for estimating established study variables While CB-SEM is utilized for testing existing theories, PLS-SEM is better suited for theory development and prediction in exploratory research (Chen et al., 2022) Given that this research framework is grounded in prior studies, CB-SEM was employed to investigate the relationships between variables The analysis utilized a two-stage SEM approach, following Gerbing and Anderson's (1988) methodology Initially, Confirmatory Factor Analysis (CFA) was conducted to validate the measurement model, followed by SEM techniques to explore the structural relationships among latent constructs The findings of this study will be discussed in detail.
Meaning of research topic
Theoretical deliverables
The investigation into the effects of Green Finance (GF), Financial Accountability (FA), Corporate Social Responsibility (CSR), and Green Innovation (GI) on the Environmental Performance (EP) of banking institutions is a significant area of research in both developed and developing nations This study presents three key theoretical implications.
First, there is the proven theory of green finance Legitimacy Theory: GF helps businesses enhance their legitimacy and receive support from stakeholders, such as customers, governments and communities (Suchman, 1995).
Second, prove the relationship in terms of related hypotheses:
GF and EP: GF can promote EP by providing capital for environmental projects, encouraging green innovation and raising environmental awareness (Scholtens & Dam, 2007).
CSR and EP: CSR can lead to better EP through activities such as protecting the environment, investing in social projects and raising environmental awareness among employees (Waddock & Graves, 1997).
G1 serves as a mediator in the relationship between factors such as FA, GF, CSR, and EP Companies that implement green innovation are more likely to capitalize on business opportunities arising from environmental protection efforts (Horbach, 2008).
Vietnam is currently experiencing robust economic growth, resulting in a significant increase in energy and resource demand, which impacts both the environment and the economy Banks are crucial in supporting this development by utilizing financial instruments like green loans, investing in environmental initiatives, and implementing incentive policies to encourage businesses to adopt green financing (GF) and green investment (GI) practices.
Practical deliverables
In the era of Industrialization and Modernization 4.0, "Environmental Protection" has emerged as a critical concern Implementing a green model across various sectors, including finance, technology, and innovation, significantly influences the environmental practices of banking organizations This impact manifests in both positive and negative aspects, highlighting the complex relationship between modernization and sustainable development in the banking industry.
This research plays a crucial role in environmental management, particularly for banking institutions, by demonstrating that various tested factors positively influence environmental performance (EP) It offers scientific evidence that can assist policy planners and regulatory agencies in crafting effective policies and solutions The ultimate goal is to motivate banks to adopt environmental protection measures, thereby fostering sustainable economic development.
Banks should prioritize Green Financial factors and leverage financial technology to lower operational costs It is essential to foster a healthy work-life balance for employees while actively participating in charitable and social initiatives Furthermore, enhancing compliance with environmental standards is crucial for sustainable banking practices.
RESEARCH OVERVIEW
Introduction
The title section outlines the study's rationale, objectives, scope, methods, findings, and structure A review of domestic and international research reveals limitations in previous studies regarding the relationship between Corporate Social Responsibility (CSR), Financial Analysis (FA), Green Finance (GF), Green Innovation (GI), and Environmental Performance (EP) Chapter 1 provides an overview and commentary on these findings, detailing the studies' authors, publication sources, years, sample sizes, and respondent demographics Key related research includes the impact of Fintech on GF and the environment, the effectiveness of bank operations during the COVID-19 pandemic, and the roles of environmental strategy and green innovation The research utilized various tools such as the UEH library, Rabbit Research, and Google Scholar, along with secondary data from reputable news sites, focusing on keywords like GF, FA, GI, CSR, and EP Reliability checks were conducted on referenced studies by examining journal rankings, culminating in a synthesis of credible studies to enhance understanding of the research topic through qualitative integration methods.
Previous studies
Research on the relationship of green finance, green innovation and environmental performance.
In 2023, Guang-Wen and Siddik published a study in the Journal of Environmental Science and Pollution Research, investigating the relationships among Environmental Performance (EP), Green Financing (GF), and Financial Accountability (FA), while also examining the mediating role of Green Innovation (GI) The research utilized a carefully crafted questionnaire to gather primary data from professionals working in Private Commercial Banks (PCBs) in Dhaka, Bangladesh Data collection occurred from July to November 2021, with respondents selected through a convenience sampling method.
A total of 360 questionnaires were collected for the study, but 58 were excluded due to incomplete or missing data, resulting in a final sample size of 302 participants Before conducting the main survey, a pilot test was performed with 25 randomly selected PCB employees to evaluate the reliability and quality of the questionnaire items.
This study utilized SEM methodology to examine the impact of Financial Access (FA) on Economic Performance (EP), Growth Factor (GF), and Growth Index (GI) in the financial sector of developing countries, specifically in Bangladesh during the pandemic The findings confirmed that FA significantly enhances EP, GF, and GI, with GI mediating the relationship between EP, FA, and GF Additionally, GF positively influences both EP and GI, while GI also boosts EP Overall, the research highlights the importance of GI, FA, and GF in improving EP and urges the banking sector to integrate fintech and sustainable financing practices to support the country's sustainable development goals.
Figure 1.1: Research model hy Guang-Wen and Siddik (2023)
Research on the relationship of fintech adoption and green innovation.
A study by Yan et al (2022), published by the Multidisciplinary Digital Publishing Institute (MDPI) on September 8, 2022, investigates the impact of Financial Technology (FinTech) adoption on the sustainability performance (SP) of banking institutions in Bangladesh, an emerging economy The research also explores the mediating roles of governance infrastructure (GI) and governance frameworks (GF) in the relationship between FinTech adoption (FA) and sustainability performance Primary data was collected from commercial bank employees in Dhaka through a structured questionnaire between January and March 2021, utilizing convenience sampling.
Out of 400 initially collected questionnaires, 49 were excluded due to inaccuracies or missing data, leading to a final sample size of 351 To ensure the validity and clarity of the survey questions, a pilot test was conducted with 30 randomly selected employees from commercial banks prior to the main survey.
The study utilized a two-staged approach combining structural equation modeling (SEM) and an Artificial Neural Network (ANN) for data analysis Initially, SEM via SmartPLS 3 was employed to assess the influence of financial accountability (FA) on the sustainability performance of banking institutions in Bangladesh, while accounting for the mediating roles of governance indicators (GI) and governance factors (GF) Subsequently, an ANN analysis was conducted to rank the normalized importance of predictors derived from the SEM findings.
Least Squares (PLS) analysis, addressing nonlinear interactions between dependent and independent variables The IBM SPSS neural network module was utilized for this analysis.
The empirical findings reveal that financial activities (FA) significantly impact the sustainability performance of banking institutions This underscores the essential role of FA in promoting sustainability through the adoption of eco-friendly practices such as digital lending, electronic payments, mobile banking, and online customer support services Furthermore, this study stands out as one of the first investigations in this field, addressing a gap in the existing literature.
To achieve comprehensive organizational sustainability, it is essential for banking institutions to integrate eco-friendly practices into their daily operations The study reveals that Green Innovation (GI) fully mediates the relationship between Financial Accountability (FA) and Sustainability Performance (SP), demonstrating that FA influences SP directly and indirectly through Green Technology (GT).
Empirical data indicates that green finance (GF) serves as a crucial mediator between financial activities (FA) and sustainable performance (SP) This highlights the importance of green initiatives, including online banking, green technology, online customer service, and green banking In conclusion, financial activities not only boost green finance but also contribute to green innovation (GI), ultimately improving organizational sustainable performance.
Figure 1.2: Research model by Yan et al (2022)
A study by Tian et al (2023) investigated the impact of Green Technology Leadership (GTL) and fintech innovations on the Environmental Performance (ENP) of small and medium-sized enterprises (SMEs) in Bangladesh's manufacturing sector, utilizing survey data from 286 managers The research employed the ability-motivation-opportunity (AMO) framework, modernization theory (EMT), and artificial neural network (ANN) techniques Findings from a two-stage hybrid structural equation modeling (SEM-ANN) analysis revealed that both fintech and GTL significantly enhance ENP in SMEs Additionally, Green Innovation (GI) emerged as a crucial mediator between ENP and both Financial Agility (FA) and GTL The ANN Evaluation Sensitivity Analysis highlighted FA as the most significant predictor of a company's ENP, while GTL was found to further improve the company's overall performance.
GI and, subsequently, its ENP.
The EMT and AMO hypotheses have gained traction through this investigation, which proposes a framework for future research on environmental management, emphasizing the roles of FA, GTL, and GI in the industrial sector The study highlights the positive impact of FA on GI and ENP within Bangladesh's SME manufacturing market, offering SME managers a valuable model to enhance performance and GI via GTL, supported by regulators and fintech Additionally, manufacturing companies are shown to alleviate negative environmental effects by fostering employee engagement and embracing technological advancements However, the research is limited to SMEs in Bangladesh, neglecting both internal and external factors, and does not utilize a combination of horizontal and vertical research methods to assess the long-term effects of fintech and GTL on corporate ENP and GI.
Figure 1.3: Research model by Tian et al (2023)
Research on the relationship of CSR, green innovation, environmental performance.
Kraus et al (2020) investigate the influence of Corporate Social Responsibility (CSR) on Entrepreneurial Performance (EP) in their study published in the journal Technological Forecasting and Social Change Utilizing the natural Resource-Based View (RBV) theory, the research explores the connection between CSR initiatives and their effects on entrepreneurial outcomes.
This study analyzes data from 297 companies within the Federation of Malaysian Manufacturers (FMM), derived from a comprehensive survey of 661 manufacturing firms, achieving a response rate of 44.9% Although the data collection method was susceptible to common method bias (CMB), researchers, including Sascha Kraus, effectively mitigated this risk by ensuring participant privacy and safeguarding information from third-party disclosure.
The study findings reveal that Corporate Social Responsibility (CSR) does not directly influence Environmental Performance (EP) However, there is a positive correlation between environmental strategy, CSR, and Green Innovation (GI), which contributes to enhanced EP This indicates that CSR serves as a mediating factor linking environmental strategy and improved performance.
The study highlights the importance of Corporate Social Responsibility (CSR), Green Innovation (GI), and environmental strategies in enhancing economic performance (EP) for large manufacturing companies It offers valuable insights for policymakers and managers, enabling them to make informed decisions that ultimately improve profitability in their business operations.
Figure 1.4: Research model by Kraus et al (2020)
Research Gap
Numerous studies, both domestic and international, have examined the connections between Corporate Social Responsibility (CSR), Governance Factors (GF), Financial Accountability (FA), and Economic Performance (EP), particularly within the banking sector The role of Governance Indicators (GI) as an intermediary variable in assessing the effects of CSR and GF on EP is gaining traction However, a review of existing literature reveals significant limitations in the research methodologies employed in this area.
One notable limitation in current research is the lack of comprehensive reporting and diverse sample representation For instance, the study by GLiang-Wen and Siddik (2023) includes samples that may not be applicable to developing countries or various economic contexts Similarly, Kraus et al (2020) focus solely on data from large Malaysian manufacturing firms, neglecting small and medium-sized enterprises (SMEs) and data from other nations Furthermore, Nsiah et al.'s research also highlights these gaps in sample diversity, underscoring the need for more inclusive studies.
The studies conducted by Bhat et al (2024) and Yan et al (2022) exhibit significant limitations due to their restricted sample sizes and focus Bhat et al (2024) analyzed data from only 10 prominent industrial organizations in Delhi, suggesting the need for a larger sample of 20-25 SMEs from various cities across India to enhance the study's applicability Similarly, Yan et al (2022) limited their research to Bangladeshi bank employees, which restricts the findings to a single industry and country, making it less relevant for other economies and emerging business sectors Expanding the scope of these studies would provide more comprehensive insights into the respective industries.
Previous studies, including those by Bhat et al (2024), Kraus et al (2020), and Tian et al (2023), primarily employed cross-sectional research methods, which lack longitudinal data This approach limits the ability to generalize findings over time, making it difficult to ensure consistent long-term results.
Previous studies have primarily focused on green innovation (GI) as an intermediary variable in the relationship between corporate social responsibility (CSR), green finance (GF), financial performance (FA), and environmental performance (EP), often neglecting other significant mediators For instance, Guang-Wen and Siddik (2023) examined the impact of FA on GF and EP solely through the lens of GI, overlooking crucial factors like technological expertise, environmentally conscious employee behavior, and strategic environmental initiatives Thus, it is essential to explore the inclusion of green climate and green human resource management (HRM) concepts as moderating variables in the interplay between EP and CSR.
2024), as well as considering green behavioral factors of employees, environmental strategy, and technological capabilities (Yan et al., 2022).
Research on the relationships between Corporate Social Responsibility (CSR), Green Finance (GF), Financial Accounting (FA), Environmental Performance (EP), and Green Innovation (GI) is increasingly recognized as vital, particularly in Vietnam While studies in this area are growing, they often lack depth and detail In the context of a developing economy, both businesses and banks are placing significant emphasis on GF and EP Consequently, leaders are focusing on sustainable solutions like FA, CSR, and GI to enhance competitiveness, maintain operations, and improve environmental outcomes This highlights the necessity of further research in this field.
The existing research gap highlights the need for studies exploring the impact of governance frameworks (GF), corporate social responsibility (CSR) in its social, environmental, and economic dimensions, governance indicators (GI), and financial accountability (FA) on employee performance (EP).
This study aims to assess the effects of Green Finance (GF) and Corporate Social Responsibility (CSR), alongside Governance Index (GI) and Financial Accountability (FA), on Economic Performance (EP) Additionally, it will propose optimization strategies to enhance EP and address existing research gaps.
SUMMARY
This chapter provides a comprehensive overview of domestic and international research on Green Financial models, focusing on technology, social responsibility, and Green Innovation to assess their impact on the Environmental Performance of banking organizations It highlights the significance of Green Innovation and identifies a research gap regarding the influence of Fintech Adoption in the context of industrialization and modernization 4.0, building on the findings of Dai et al (2022) By employing primarily quantitative methods, supplemented by qualitative approaches, the author aims to enhance the reliability and practical value of the research Consequently, hypotheses are formulated, and a research model is developed, integrating insights from Dai et al (2022).
In 2022, the research evolved through various stages, building on the model established by Liu et al (2023) while focusing on individual user perspectives The study validates key factors such as Green Finance, Corporate Social Responsibility, Fintech Adoption, Green Innovation, and Environmental Performance.
LITERATURE REVIEW
Introduction
This chapter outlines an overview of both domestic and international studies, highlighting existing research gaps It will be structured into several key sections, including background theory, research concepts, hypothesis development, and the research model.
Introduction to Green Finance
As of now, a clear and widely accepted definition of Green Finance is difficult to pinpoint due to two primary factors: many publications, such as those by Corporation (2013) and Spratt and Griffith-Jones (2013), do not offer a definition, and existing definitions vary considerably Despite the limited literature on the subject, a few definitions can be found.
Green Finance, as defined by Hohne et al (2012), refers to a diverse range of financial investments aimed at supporting sustainable development initiatives and environmental policies that promote a sustainable economy This concept encompasses not only climate finance but also various environmental goals, including industrial pollution control, water sanitation, and biodiversity conservation Specifically, mitigation finance focuses on investments that reduce or prevent greenhouse gas emissions, while adaptation finance targets investments that strengthen resilience against the impacts of climate change on both goods and people.
Zadek and Flynn (2013) highlight that "Green Finance" is often equated with "Green Investment," but its scope is broader, as detailed by Bloomberg New Energy Finance Green Finance includes operational costs related to Green Investments, such as project preparation and land acquisition expenses, which can be significant and pose unique financing challenges.
Green Finance in the banking sector, as outlined by Coopers (2013), refers to financial products and services that integrate environmental considerations in lending decisions, post-lending monitoring, and risk management Its main goal is to promote environmentally responsible investments and foster the development of low-carbon technologies, projects, industries, and businesses.
Green Finance (GF), as outlined by Bõhnke et al (2015), includes all forms of investment and lending that take environmental impacts into account and promote sustainability Sustainable investment and banking are vital components of GF, as they involve making decisions rooted in environmental screening and risk assessment to meet sustainability standards.
Combining the above studies and similar secondary data, we can propose a definition of Green Finance Green finance involves:
Funding is essential for both public and private green initiatives, addressing preparation and capital expenses across various sectors This includes environmental goods and services, such as water management and biodiversity protection, as well as efforts to prevent, minimize, and compensate for environmental and climate-related damages Key projects may involve energy efficiency improvements and dam construction, all aimed at fostering sustainable development.
Supporting public policies that cover operational expenses is essential for advancing environmental projects and initiatives aimed at mitigating or adapting to environmental damage One effective example of such policies is the implementation of feed-in tariffs for renewable energy sources, which incentivizes the adoption of clean energy solutions.
Engaging with dedicated components of the financial system for green investments, including the Green Climate Fund and tailored financial instruments like green bonds and structured green funds, is essential It is important to consider the unique legal, economic, and institutional frameworks that govern these investments to maximize their impact and effectiveness.
Background theory
Legitimacy theory emphasizes that societal consent is vital for an organization's sustainability, prompting businesses to align their values and strategies with community norms to enhance adaptability (Dowling & Pfeffer, 1975) Consequently, companies must engage in activities that resonate with social perspectives Under this theory, Corporate Social Responsibility (CSR) is viewed as a set of initiatives aimed at improving performance and sustainability while benefiting society and the environment (Chen et al., 2022) CSR encompasses strategies that enable businesses to operate responsibly and ethically, making a positive impact on community development (Mocan et al., 2015).
Green finance (GF) is a strategic approach for companies to gain and maintain legitimacy by effectively managing their environmental impacts, such as reducing energy consumption and carbon emissions Innovative initiatives, referred to as green initiatives (GI), including green banking and paper reduction, further enhance global environmental sustainability To achieve and uphold legitimacy, businesses should integrate corporate social responsibility (CSR) with GF and GI into their strategies, which will ultimately support their efforts toward overall environmental sustainability.
Financial agility (FA) enhances the competitiveness and efficiency of banks and financial institutions (Dwivedi et al., 2021) Research indicates that governance indicators (GI) positively influence economic performance (EP) and mediate the connections between FA, governance factors (GF), EP, and corporate social responsibility (CSR) in the banking sector (Guang-Wen & Siddik, 2023) Despite some studies highlighting the beneficial effects of GI and GF on the EP of banks, there is a scarcity of research exploring the interplay among GF, FA, CSR, EP, and GI within financial institutions This study aims to establish a research framework to evaluate these relationships in the banking sector, contributing to sustainable economic development in the country.
Research concept
Green Finance (GF), often referred to as sustainable finance, environmental finance, climate finance, and green investment, encompasses various market-based instruments aimed at enhancing environmental quality and transferring environmental risk It plays a crucial role in achieving the United Nations' Sustainable Development Goals (SDGs) for 2030, particularly goals 11, 12, and 13 The global importance of GF is highlighted by its increasing recognition in academic and business circles, with significant attention drawn during the G-20 nations’ eleventh conference in Hangzhou, China, in 2016.
Green finance (GF) refers to the policies and investments by financial institutions aimed at fostering a green economy, as defined by Lindenberg (2014) This emerging financial phenomenon integrates economic incentives with environmental protection, positioning GF as a key driver for environmentally friendly initiatives (Wang & Zhi, 2016; Zheng et al., 2021) The European Commission highlights that GF in financial services involves investment decisions that consider environmental, social, and governance factors, ensuring satisfaction for both customers and society at large (Zheng et al., 2021).
The International Finance Corporation identifies Green Financing (GF) as a viable investment that protects the environment, fosters social equity, and drives economic growth (Liu et al., 2019) This study defines GF as the funding of diverse eco-friendly initiatives, including renewable energy, alternative energy, energy efficiency, recycling, waste management, and the development of green industries, all aimed at achieving organizational sustainability (Zheng et al., 2021).
Global warming poses a significant challenge globally (Li et al., 2020) Green Innovation (GI) is characterized by development strategies that minimize waste, safeguard the environment, lower air pollution, reduce energy consumption, and limit reliance on coal, oil, and electricity while promoting energy conservation (Kraus et al., 2020) GI encompasses technological advancements aimed at waste reduction, which play a crucial role in addressing climate change Enhancements in this field are often associated with an organization’s environmental management plans and are recommended to improve environmental performance (Adegbile et al., 2017).
In this study, green innovation (GI) is defined as technological advancements in the banking sector, including green banking, internet banking, mobile banking, and environmentally friendly strategies, all aimed at reducing pollution and promoting sustainability GI is crucial for businesses today to address the impacts of climate change effectively.
Green Innovation (GI) aims to reduce the environmental impact of production and operations by enhancing techniques, methods, structures, products, and management practices (Asadi et al., 2020) By implementing these advancements, organizations can effectively promote sustainable development and address environmental conservation challenges GI consists of three key elements: organization, process, and product (Lian et al., 2022) Consequently, GI is recognized as a significant predictor of business performance (Qiu et al., 2020).
The banking sector has effectively harnessed Financial Automation (FA) to boost employee productivity and lower costs while promoting sustainability during the transition process The integration of Fintech enhances bank transparency and improves stakeholders' analytical capabilities through digital technology FA's application is adaptable, leveraging the distinct characteristics of disruptive innovation, as outlined in Rogers' theory This innovation spreads within social systems, disseminated through various communication channels over time, allowing participants to reach a consensus on sharing and implementing new ideas, ultimately driving innovation.
FA simply involves integrating modern technologies to revolutionize financial products and services.
Financial automation (FA) is gaining significant attention for its potential to transform financial services by offering a more personalized and comprehensive experience (Xue et al., 2022; Zarrouk et al., 2021) It introduces innovation in financial products, service models, and technology applications As a result, businesses and banks are increasingly recognizing that financial technology enhances the speed of financial decision-making, facilitating quick and immediate payment solutions (Farboodi & Veldkamp, 2020; Hommel & Bican, 2020).
Environmental performance (EP) refers to how well an organization integrates environmental considerations into its operational decisions, balancing acceptable standards, self-interest, and stakeholder responses (Tytcca, 1996) Increasing concerns among stakeholders about environmental impacts related to products, manufacturing, packaging, and distribution have emerged (Kohtala, 2015) This growing awareness serves as a significant motivator for organizations to prioritize environmental issues as essential components of their strategic management practices (Joyce & Paquin, 2016; Saeidi et al., 2015).
Eco-friendly practices, known as Environmental Performance (EP), involve using sustainable materials, reducing pollution, lowering carbon emissions, and enhancing energy efficiency while avoiding harmful substances (Zhu et al., 2010) Additionally, carbon taxes and emissions regulations help organizations decrease their inputs, outputs, and overall profitability (Nie et al., 2022) The environmental performance of a company can be assessed through its operations and products (Klassen & Whybark, 1999), with the most reliable measure of a business's environmental effectiveness being the efficient utilization of resources (Tung et al.).
2014) The continual improvement of EP not only enhances market share (Dangelico & Pontrandolfo, 2015) but also assists organizations in retaining existing customers & persuading potential customers (Hsu et al., 2016).
Corporate Social Responsibility (CSR) is a vital concept in today's business landscape, emphasizing the importance of sustainability and community support (Xiang et al., 2021) Rooted in legitimacy theory, CSR encompasses actions that enhance a company's performance while benefiting the environment and society (Guang-Wcn & Siddik, 2022) It involves ethical and socially responsible practices that contribute to community development (Mocan et al., 2015) As businesses navigate an evolving market, they encounter challenges in implementing effective CSR strategies essential for sustainable growth Over time, the definition of CSR has evolved to integrate social, environmental, and economic considerations into corporate strategies (Ikram et al., 2019; Le et al., 2021).
The definition of Corporate Social Responsibility (CSR) has evolved over time, reflecting a complex relationship with sustainable development goals while garnering interest from stakeholders and businesses (Singh & Misra, 2021) Ultimately, CSR is integral to business operations, highlighting the importance of socially responsible practices in utilizing resources Engaging communities in CSR initiatives contributes to reducing emissions and enhancing environmental awareness and sustainability (Gordon et al., 2012; Santoso et al.).
2022) Furthermore, CSR makes efficient use of resources and improves business performance and reputation among stakeholders, clients, and suppliers (Orlitzky et al.,
2003) Consequently, implementing CSR improves government support for sustainable business investments but requires readiness from senior management (Abbas, 2020; Tarigan cl al., 2020; Wongthongchai & Sacnchaiyathon, 2019).
Hypothesis development and research models
Green Finance (GF) and Green Innovation (GI)
Financial institutions must evaluate the costs and benefits of environmental factors in their capital allocation to promote sustainable development Green Finance imposes restrictions on polluting enterprises by increasing loan interest rates, which raises their debt financing costs This approach not only reduces investments in pollution but also encourages these enterprises to pursue Green Innovation.
The development approach of GF significantly improves accessibility to financing for environmental protection enterprises by increasing loan amounts and lowering interest rates, which alleviates their financial burdens (Xu & Li, 2020) This financial support boosts the willingness of these enterprises to engage in green initiatives, thereby accelerating the sustainable development of the green industry (Xu & Cui, 2020; Yu et al., 2021) Based on this, the study proposes several hypotheses.
HI: The GI of hanking institutions experiences a substantial positive influence from GF.
Fintech Adoption (FA) and Green Innovation (Gl)
FA is essential for businesses in adopting G1 technology, which significantly boosts financial performance and channels capital into green innovation (GI) activities By promoting collaboration among companies, financial institutions, banks, and stakeholders, FA amplifies the beneficial effects of GI initiatives.
2022) Simultaneously, it also creates favorable conditions for integrating G1 knowledge within businesses (Rao Ct al., 2022).
Financial organizations and businesses often face significant information asymmetry, which can diminish their willingness to invest in green initiatives (Yuan et al., 2021) In response to this challenge, banks and financial institutions are innovating to enhance their competitiveness by addressing inefficiencies and improving access to financial resources (Laeven et al., 2015).
Research indicates that R&D investment in environmental innovation is crucial for fostering Green Innovations (Lee & Min, 2015) Fintech plays a pivotal role in encouraging businesses and banks to implement green control technologies, thereby improving regional G1 indices (Yu et al., 2020; S Feng et al., 2022) Moreover, Fintech enhances both the quantity and quality of innovations in green organizations (Rao et al., 2022) and leverages blockchain technology to create systems and products that support recycling, reuse, and circular production (Rehman Khan & Yu, 2021; Saurabh & Dey, 2021) Additionally, Fintech can further boost green innovation by increasing investments in research and development (Liu et al.).
2022) Therefore, this research proposes the following research hypothesis:
H2: FA has a significant positive impact on the GI.
Corporate Social Responsibility (CSR) and Green Innovation (GI)
The integration of advanced technology in corporate settings enhances the relationship between Corporate Social Responsibility (CSR) and Green Innovation (GI), aligning with community needs and sustainability goals This dynamic interplay allows CSR and GI to mutually benefit each other, significantly impacting market performance Consistent CSR practices not only improve GI outcomes but also position companies favorably in the marketplace Additionally, government-supported CSR initiatives emphasize ecological innovation, particularly for environmentally conscious businesses.
Green Innovation (GI) involves corporate initiatives aimed at improving processes, markets, and products while reducing natural resource consumption and minimizing environmental impact Studies indicate that the environmental performance (EP) of businesses is crucial in promoting ecological innovation and GI, particularly among the 3,647 small and medium-sized enterprises across 38 countries.
Companies that leverage their resources and capabilities can achieve a competitive advantage by aligning their Corporate Social Responsibility (CSR) performance with Green Innovation (GI) (Broadstock et al., 2020) Additionally, these companies are well-equipped to share and incorporate knowledge pertaining to CSR, enhancing their overall effectiveness in sustainable practices.
Implementing Corporate Social Responsibility (CSR) offers numerous benefits, including improved employee skills, enhanced company image, increased customer satisfaction, environmental sustainability, and a larger workforce Research by Sidhoum and Serra highlights a significant correlation between CSR and the performance of electricity companies in the United States, indicating that economic, social, and environmental performance are interconnected Green Innovations play a crucial role as catalysts for economic welfare and the advancement of environmental systems.
Research by Kraus et al (2020) and Hao and He (2022) highlights the significant impact of Corporate Social Responsibility (CSR) on innovation Supporting evidence from Zhou et al (2019) further validates the link between environmental CSR and innovation Theoretical discussions by McWilliams and Siegel (2000) also recognize the relationship between CSR and innovation However, there remains a limited amount of literature focusing specifically on the intersection of environmental CSR and innovation.
2019) Therefore, research has proposed the following hypothesis:
Hỉ: CSR has a positive effect on G/.
Green Finance (GF) and Environmental Performance (EP)
Green finance (GF) plays a vital role in enhancing the environmental performance (EP) of organizations, especially in the banking sector It enables businesses to invest in technologies and solutions that reduce their environmental impact, leading to improved EP As noted by Zhang et al (2022), GF serves as a funding source for various environmental protection initiatives, including clean energy and technologies that promote continuous improvement in a bank's EP Furthermore, Indriastuti and Chariri (2021) highlight that GF supports numerous eco-friendly projects, significantly contributing to the sustainability of businesses within organizations.
Green finance (GF) and environmental performance (EP) are gaining prominence due to their support for eco-friendly projects Research by Xu et al (2020) highlights GF's positive effects on businesses' environmental performance Recent studies (Chen et al., 2022; Zhang et al., 2022) indicate that GF significantly enhances the EP of banking institutions Therefore, it can be concluded that involvement in various sustainable financial initiatives can improve the environmental performance of banks This leads to the proposal of the following research hypothesis.
H4: The EP of banking institutions experiences a substantial positive influence from GE
Corporate Social Responsibility (CSR) and Environmental Performance (EP)
The relationship between banking organizations and society is increasingly significant, with Corporate Social Responsibility (CSR) playing a crucial role in enhancing environmental performance (EP) While some studies have focused on the link between CSR and financial performance, few have explored its impact on EP Recent research by Ahmad, Ullah, et al (2021) demonstrates that CSR initiatives can significantly improve EP by fostering environmentally conscious behavior among employees, thereby reducing environmental footprints Additionally, Suganthi (2020) highlights that CSR positively influences market performance, costs, and environmental outcomes.
Despite the abundance of research on Corporate Social Responsibility (CSR), the term remains ambiguous, complicating empirical studies (Orlitzky et al., 2011) Our research focuses on three key dimensions of CSR: social, environmental, and economic (Alvarado Herrera, 2008) Limited studies have explored the impact of CSR on organizational performance, with findings indicating that CSR initiatives can enhance performance (Long et al., 2020; Orazalin).
The significance of Corporate Social Responsibility (CSR) in business has notably increased, as highlighted by Málovics et al (2008) Research by Kraus et al (2020) indicates that Green Innovation (GI) serves as a mediator between CSR and Environmental Performance (EP), demonstrating that CSR positively impacts GI Therefore, it can be concluded that implementing CSR practices substantially enhances an organization's EP within the banking sector.
H5: CSR greatly improves the EP of hanking institutions.
Green Innovation (Gl) and Environmental Performance (EP)
Faced with the challenges of climate change & the risk of depicting natural resources, the banking industry is increasingly emphasizing the implementation of GI to improve EP
SUMMARY
Research process
Our research adhered to a systematic methodology for implementing Partial Least Squares Structural Equation Modeling (PLS-SEM), as described by Hair Jr et al (2017) This approach comprised several key steps designed to guarantee both rigor and comprehensiveness in our findings.
Step 1 involved specifying the structural model, where the relationships among the variables under investigation were delineated.
In Step 2, wc specified the measurement model, which entailed defining and operationalizing the constructs of interest and their corresponding indicators.
Step 3 encompassed data collection and examination, wherein data relevant to the research variables were gathered and scrutinized for quality and reliability.
In Step 4, the PLS path model was estimated, employing the collected data to analyze the relationships between constructs.
In Step 5a, we evaluated the PLS-SEM outcomes of the reflective measurement models by analyzing the goodness-of-fit indices and determining the validity and reliability of the measurement model.
Step 5b involved a similar assessment but for the reflective formative measurement models, considering the unique characteristics of formative constructs.
In Step 6, we evaluated the PLS-SEM results of the structural models, focusing on the significance and strength of the relationships hypothesized in the structural model.
Step 7 encompassed advanced PLS-SEM analysis, which may include additional analyses such as mediation or moderation tests to further explore the relationships among variables.
Finally, in Step 8, we interpreted the results obtained from the PLS-SEM analysis, drawing conclusions based on the findings and discussing their implications for the research objectives.
Figure 3.Ỉ: Systematic procedure for applying PLS-SEM (Hair Jr et al., 2017)
Scale
A survey questionnaire was created based on established scales from prior research to test the hypotheses This structured tool utilized a five-point Likert scale for data collection and was organized into seven sections: demographics, GF, FA, EP, Gl, and CSR The demographic section gathered essential information about respondents, including their gender, age, job position, and educational qualifications.
The scale outlined in Table 3.1 is derived from the research conducted by Dai et al (2022), published by the Multidisciplinary Digital Publishing Institute (MDPI) This scale has been synthesized and validated against values from prior studies, and additional scales from other research have also been identified.
Green Finance is a unidirectional scale inherited by our research from Chen Ct al
(2022) because this study was to identify the impact of GB practices on banks’ Environmental Performance and sources of Green Financing of private commercial banks.
Fintech Adoption is a unidirectional scale inherited by our research from Liu et al
(2023) because this study focuses on the perceptions of bank employees and explores the mediating role of Fintech Adoption (FA).
Corporate Social Responsibility (CSR) is derived from prior research, notably the work of Dai et al (2022), and encompasses three key dimensions: the Social Dimension, the Environmental Dimension, and the Economic Dimension.
Green Innovation (GI) serves as a crucial mediator in the relationship between Corporate Social Responsibility (CSR), Green Finance (GF), and Environmental Performance (EP), as highlighted in the research by Dai et al (2022) This study emphasizes the importance of GI in fostering sustainable practices within these interconnected domains.
Environntental Performance is a unidirectional scale inherited from the study of
Abuatwan, N (2023) because this study examines the intricate interplay of the environmental facets of Green Financing and their impact on sustainability performance.
Banks9 Environmental Performance is a unidirectional scale inherited from the studies Chen Ct al (2022) because this study was to identify the impact of green banking practices on banks’ Environmental Performance.
GF1 Allocating additional resources to recycling and recyclable products.
Increase in investment on waste management and green brick manufacturing.
GF3 Increase in the amount invested on energy efficiency projects.
GF4 Boosting investment in the development of the green industry
GF5 Increase in the amount invested on green marketing and others.
FAI The adoption of fmtech can reduce costs.
The integration of financial technology not only grants access to novel knowledge and technology but also fosters self-directed learning and augments information technology literacy
Fintech adoption has the potential to mitigate online fraud, mitigate information security risks, and enhance the security of financial transactions for both individuals and society.
Financial technology applications are ideal for individuals in remote areas, people with disabilities, the elderly, and those with limited education, as they provide easy access to convenient financial services.
Financial technology applications are energy-efficient and are regarded as environmentally conscious, thereby gaining favor among consumers.
Our bank is striving to establish a harmonious work-life balance for our employees.
SDCSR2 Our bank is evaluating the influence of our operations on the local community.
SD_CSR3 Our bank is prioritizing workplace safely.
SD_CSR4 Our bank is collaborating on charitable and social initiatives.
END_CSR1 Our bank is examining the ecological implications of its operations.
END CSR2 Our bank is implementing renewable energy sources.
ENDCSR3 Our bank is executing initiatives to foster environmental responsibility.
ED_CSR1 Our bank is providing a competitive salary package.
EDCSR2 Our bank holds equal respect for both customers and suppliers.
ED_CSR3 Our bank is conducting cost-effective operations.
ED_CSR4 Our bank is actively managing financial risks.
Gil Our bank is utilizing green technology.
Dai et al (2022) GI2 Our bank is engaging in green banking practices.
GI3 Our bank is enacting a green strategy.
GI4 Our bank is ensuring a sustainable work environment.
GI5 Our bank is providing online customer service.
ESPI Green financing significantly reduces paper usage and energy consumption in our bank.
ESP2 Green financing significantly decreases the operational expenditure of our bank.
ESP3 Green financing significantly improves the revenue and market share of our bank.
ESP4 Green financing improves banks' compliance with environmental standards.
BEP1 Reduction of energy consumption from banking activities.
BEP2 Minimization of carbon emissions from banking activities.
BEP3 Improving banks' compliance with environmental standards.
BEP4 Provision of training on environmental protection and energy savings to the staff.
Research design and methods
This study aims to validate the research framework proposed by Dai et al (2022); hence, quantitative methodology is deemed most appropriate across two stages: preliminary (qualitative) investigation and formal research.
To achieve linguistic equivalence in the measurement scales of research concepts, a preliminary qualitative study was conducted to evaluate the clarity of meaning in the translated phrases from English to Vietnamese.
3.4.2.1 Data and data collection methods
According to Hair et al (2016), when using PLS-SEM, the sample size should be at least
10 times the largest number of observed variables in the concept with the causal scale or
In this study, the authors established that the system quality of the causal scale, which includes the maximum number of observed variables set at 10, necessitates a minimum of 100 samples To enhance data reliability, they opted to collect a total of 418 samples from various banks.
In a study conducted in the Ho Chi Minh City area, primary data were gathered by distributing 418 survey questionnaires to bank employees and related positions via Google Form Utilizing a 5-point Likert scale, which is widely recognized in sociological research, respondents rated their agreement from 1 (strongly disagree) to 5 (strongly agree) This scale measured various variables, including experience, profession, sector, capital, and workforce size Additionally, participants were encouraged to share the survey link with colleagues in the banking industry to enhance data collection.
This study employs a two-stage approach to quadratic modeling analysis, specifically utilizing higher-order components (HOCs) such as GF, FA, and CSR as second-order variables, while identifying low-order components (LOCs) as first-order variables.
In the measurement model of higher-order constructs (HOC), researchers typically assign observed variables from lower-order constructs (LOC) to HOCs based on the principle of repeated observed variables This approach often results in the first-order variables explaining nearly all the variance of the second-order variables, yielding an R² value near 1 However, the use of repeated variables may introduce bias overlap and negatively impact the discriminant validity of level 2 variables.
To solve this problem, a two-stage analysis method is applied.
In the initial stage, the first-order model was assessed to derive latent scores for the first-order variables (LOC) Subsequently, in the second stage, these LOC scores served as representative variables in the measurement model for the second-order variables (HOC) The LOC scores were extracted from the output generated by SmartPLS.
Testing the measurement model involves data collection and cleaning, followed by an analysis that includes reliability indicators, convergent validity, and discriminant validity Reliability is evaluated using Cronbach’s alpha coefficient, where a composite reliability between 0.7 and 0.9 is considered acceptable, while values exceeding 0.95 are deemed unsatisfactory (Hair Jr et al., 2017) Convergent validity is determined by examining the outer loading factor of observed variables and the average variance extracted (AVE) Discriminant validity is measured using the HTMT ratio coefficient, with optimal results indicated by an HTMT index of less than 0.9.
Structural model testing involves evaluating key metrics such as R-square, f2, the bootstrap test, the variance inflation factor (VIF), Ọ2, and the method bias test The R-square value should range between 0 and 1, with thresholds of 0.25, 0.50, and 0.75 indicating weak, moderate, and strong explanatory power, respectively (Hair Jr et al., 2017) Additionally, the f2 value signifies the impact level, categorized as small (0.02 < f2 < 0.15), medium (0.15 < f2 < 0.35), and large (f2 > 0.35) (Hair Jr et al., 2017).
Bootstrap testing is performed with exaggerated data from 5000 samples to test the impact of the hypotheses, in which the t-value must be greater than 1.96 and the p-value
To achieve statistical significance, a p-value of less than 0.05 is required (Hair Jr et al., 2017) The Q2 test evaluates model quality at weak, moderate, and strong levels For the VIF multicollinearity test, a value below 2 is ideal, values below 5 are acceptable, and values above 5 indicate the need for reevaluation of the observed variables (Hair Jr et al., 2017) Additionally, method bias is assessed using the EFA index, which should be less than 50%, alongside a VIF index of less than 3.3 (Kock, 2015).