Research purpose: Our study aims to examine the sustainability and enduring effectiveness of the implementation of Sustainable Development Goals within the banking sector, in order to determine if it indeed enhances and contributes to greater financial performance in comparison to the conventional organizational practices that were previously employed.
Research motivation: Sustainable development constitutes an imperative necessity and an inevitable trend within the developmental process of every nation globally, encompassing Vietnam. Consequently, both commercial banks and governmental bodies have been actively engaged in fostering high-profit activities while simultaneously striving to achieve the specific sustainable development goals and contribute to the advancement of the domestic market economy and facilitating integration into the international market.
Research design, approach, and method: We collect both macroeconomics and bank-specific data for the period spanning from 2008-2022. We utilize 3 variables to represent the impact of sustainable development goals on banks’ financial performance, specifically SDG3, SDG6, and SDG8. We employ the Generalized Method of Moments (GMM) technique to overcome the endogeneity problem.
Main findings: Applying the GMM method, our findings show that the correlation between the attainment of sustainable development goals and the financial performance of commercial banks does exist, specifically: SDG3, SDG6, and SDG8. The results show that advancements in these sustainable development goals may enhance banks’ financial performance.
Practical/managerial implications: Banks should develop green financial products, such as preferential lending options for renewable energy projects and enhancements in sustainable infrastructure. Concurrently, the utilization of digital technologies to optimize lending operations and manage environmental hazards will significantly enhance financial performance.