Page 107 - Ebook HTKH 2024

increase in natural disasters, which in turn could impact bank performance. Natural
disasters are identified as the mediating variables between climate change and bank

performance. It is of utmost importance to study the mediating effect of climate change
on bank performance through natural disasters and to analyze the different influences
by considering income heterogeneity (Zhang et al., 2022).
Since the 2007 - 2008 global financial crises and their adverse impacts on the
global economy, it is well established that a stable financial system is crucial for future
sustainability (Nasreen et al., 2017; Schmidt-Traub, 2015). Banks need the planet for
their survival. They need to operate on a habitable planet. This means that the goal of
saving this planet, which is the reason for the sustainable development goals (SDGs), is

not exogenous to banking/ financial institutions (Ozili, 2023).
Banking business activities are diverse and abundant, but credit still accounts for
a large proportion of the activities of Vietnamese commercial banks (Hoang, 2024). A
non-performing loan is one of the leading credit risks, strongly impacting commercial
banks’ business operations. The occurrence of NPLs also affects the ability of businesses
to access capital, thereby negatively affecting the growth and development of the

economy. However, commercial banks cannot eliminate NPLs but can only limit it to a
certain extent.
Although debt volume might exert significant effects on the energy sector and
environmental pollution level directly and indirectly, to the best of our knowledge, no
study has examined such a link till the date in the relevant literature; thus, searching for
such a link among debt, energy sector, and environmental quality would be a new and
interesting research area (Katircioglu & Celebi, 2018). The authors found that there is a

relationship between NPLs and CO2 emissions. Developed countries often have high
levels of CO2 per capita, while developing countries have very rapid increases in CO2
emissions (Chu & Karr, 2017). The density of CO2 emissions in Vietnam is also
increasing rapidly, affecting its finances and NPLs. This contributes to the aggravation
of environmental problems, creating challenges in finding solutions to protect the
environment.

Therefore, this research focuses on analyzing the impact of CO2 emissions on
NPLs in Vietnam and other economic factors. The following content will present the
theoretical basis and develop the hypothesis, then describe the research variables and
data in part 3. Part 4 shows the impact of CO2 emissions on NPL, drawing conclusions
and policy implications in Part 5.
2. Literature review and hypothesis development
2.1. Concepts and measuring non-performing loans
There are many different views and opinions on the concept of non-performing
loans based on the economic characteristics of each country and the attitudes of different
organizations. Non-Performing Loans refer to loans overdue for 90 days (Foglia, 2022).

According to the Basel Committee, credit risk is the possibility of borrowers or bank
customers failing to meet initially signed obligations. Loans that banks grant to
customers will be converted into overdue loans and NPLs. NPLs,

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