Green Banking, Ethical Commitment and Sustainable Development in Emerging Markets

ABSTRACT Vietnam's banking sector faces growing sustainability pressures amid underdeveloped corporate social responsibility frameworks, raising questions about whether financial mechanisms alone drive environmental performance. Survey data from 339 bank employees and managers were analysed using partial least squares structural equation modelling (PLS‐SEM) to examine how green banking practices influence environmental performance through two mediators: green finance and the novel construct of perceived ethical commitment (PEC). Employee‐, customer‐ and operational‐related practices mobilise green finance to enhance environmental performance, whereas policy‐related practices exert only a direct effect. PEC emerges as a complementary mediator, demonstrating that perceptions of ethical authenticity significantly strengthen environmental outcomes beyond financial allocations alone. Sustainable environmental performance in Vietnamese banking requires pairing green finance mechanisms with authentic trust‐building strategies. Regulators in Vietnam and ASEAN should incentivise genuine ethical engagement alongside green finance investment.