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This study examines how ESG performance affects financial risk in Vietnamese banks, considering economic policy uncertainty.

April 22, 2026Open Access

ESG Performance and Bank Financial Risk: The Moderating Role of Economic Policy Uncertainty in Vietnam

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This study examines how ESG performance affects financial risk in Vietnamese banks, considering economic policy uncertainty.
Analyzed panel data from 24 Vietnamese commercial banks from 2014 to 2024.
Measured financial risk using the Z-score for insolvency risk and loan loss provisions for credit risk.
Constructed an Economic Policy Uncertainty index from text-mined policy documents.
Environmental performance associates with higher short-term financial risk indicated by lower Z-scores.
Social performance is linked to reduced loan loss provisions, suggesting improved asset quality.
Under high economic policy uncertainty, environmental and social ESG impacts amplify financial risk while governance stabilizes it.

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Panel data analysis reveals ESG impacts on banks' risk, moderated by economic policy uncertainty, highlighting governance's role.

Quang et al. (2026) studied this question.

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