Banks’ financial performance: A study of environmental, social, and governance dimensions
Download This Article
Vu Thi Kim Oanh 
, Tran Phuong Thao, Nong Thi Anh, Nguyen Huyen Chi, Dinh Thi Yen Nhi, Mai Thi Huyen Trang
This work is licensed under a Creative Commons Attribution 4.0 International License.
Abstract
In recent years, environmental, social, and governance (ESG) issues have become of great interest, especially in the banking sector. Banks are integrating ESG dimensions into their strategies because ESG is expected to impact banks’ financial performance (Menicucci & Paolucci, 2022). This study contributes to exploring the impacts of ESG on financial performance in the banking sector by shedding light on the relationship between ESG awareness, ESG practices, and banks’ financial performance. The study also examines the mediating role of ESG practices in the relationship between ESG awareness and banking performance. Using SmartPLS 4 software, the findings confirm the positive relationship between ESG awareness, ESG practices, and banking performance across accounting measures (earnings before interest and taxes [EBIT], return on assets [ROA], net interest margin [NIM]), and also assert the mediating role of ESG practices in the relationship between ESG awareness and banking performance (Wu et al., 2024). The results support the idea that ESG adoption may increase banking performance and suggest the implementation of the ESG strategy to achieve sustainable development.
Keywords: ESG, Awareness, Practices, Banking Performance, Sustainable Development
Authors’ individual contribution: Conceptualization — V.T.K.O.; Methodology — T.P.T., N.H.C., and M.T.H.T.; Investigation — T.P.T., N.T.A., N.H.C., D.T.Y.N., and M.T.H.T.; Writing — Original Draft — T.P.T., N.T.A., N.H.C., D.T.Y.N., and M.T.H.T.; Writing — Review & Editing — V.T.K.O.; Project Administration — V.T.K.O.
Declaration of conflicting interests: The Authors declare that there is no conflict of interest.
JEL Classification: G2, G4, M1
Received: 25.09.2024
Revised: 27.12.2024; 06.02.2025; 22.04.2025
Accepted: 24.04.2025
Published online: 29.04.2025
How to cite this paper: Oanh, V. T. K., Thao, T. P., Anh, N. T., Chi, N. H., Nhi, D. T. Y., & Trang, M. T. H. (2025). Banks’ financial performance: A study of environmental, social, and governance dimensions. Risk Governance & Control: Financial Markets & Institutions, 15(2), 59–68. https://doi.org/10.22495/rgcv15i2p5
