Corporate social responsibility and bank financial stability efficiency in an emerging market: does green credit matter?

This study empirically examines the joint effect of corporate social responsibility (CSR) and green credit on the financial stability efficiency of Vietnamese banks from 2010 to 2022 using one-step stochastic frontier analysis (SFA). The results show an inverted U-shaped relationship between CSR and bank financial stability efficiency. Although green credit may reduce bank stability efficiency, our findings show a favourable joint effect of green credit and CSR on it. This positive joint effect persists for both large and listed banks. However, the opposite result is found in the case of state-owned banks. Furthermore, our results indicate that bank stability efficiency is affected by bank size, state ownership, listing status, credit risk, CEO gender, and macroeconomic factors. Also, green credit may be a promising solution to overcome the long-term disadvantage of CSR adoption on bank stability efficiency.