Green credit’s impact on pollution and economic development: A study from Vietnam

Abstract

Vietnam is actively pursuing sustainable economic development while transitioning to a greener economy, facing challenges in balancing economic growth with environmental sustainability . The evaluation of current sustainable development efforts and the identification of effective green financial tools are critical for Vietnam's progress. This study introduces the Sustainable Economic Development (SED) Index, a comprehensive measure of sustainable economic development quality across Vietnam's 63 provinces from 2015 to 2022. Using a range of analytical techniques, we explore the relationships between green credit, environmental pollution , and sustainable economic development during this period. Our findings indicate rapid growth in sustainable economic development until 2019, followed by a deceleration due to the COVID-19 pandemic and the Ukraine war. Green credit emerges as a pivotal factor in supporting sustainable economic growth, managing climate risks , and mitigating environmental pollution, particularly during times of uncertainty. Additionally, we observe spatial spillover effects , where the benefits of green credit and the challenges of environmental pollution transcend provincial boundaries. The study recommends promoting green credit policies , fostering regional cooperation, and enhancing local competitiveness, digital transformation, and social equality to advance Vietnam's journey toward sustainable economic development.

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