Determinants of Green Finance and SMEs Performance: An Empirical Study in the Vietnamese Agricultural Sector

This study investigates how financial institutions, regulatory frameworks, and enterprise-level initiatives can collectively expand access to green finance for small and medium-sized enterprises (SMEs) in Vietnam’s agricultural sector. For financial institutions, three critical points emerge: (1) the development of tailored financial products that address collateral constraints, (2) the strategic adoption of digital finance solutions, and (3) active engagement in capacity-building partnerships with SMEs. Using SmartPLS software and a sample of 245 respondents, the findings show that addressing traditional collateral requirements through innovative financial instruments, such as cash-flow-based lending or guarantees, can significantly enhance SME access to capital for sustainable investments. Integrating digital finance tools, including mobile banking and online loan platforms, enables financial institutions to reduce transaction costs and extend their outreach to underserved rural areas. These innovations are vital in agriculture, where many SMEs lack fixed assets but demonstrate strong operational potential. Complementing the role of financial institutions, supportive regulatory frameworks—including targeted subsidies, green credit lines, and transparent eligibility guidelines—reinforce confidence in green lending. Moreover, SME-level factors such as environmental awareness and managerial capacity are pivotal in ensuring that green finance translates into real-world sustainability outcomes, improving operational efficiency and long-term competitiveness. By aligning financial offerings with sustainability goals, institutions manage risk more effectively and contribute to Vietnam’s national green growth and climate resilience agenda. This study highlights the transformative potential of green finance in achieving dual objectives: environmental sustainability and economic resilience. Future research should explore emerging digital finance models and collaborative financial mechanisms to empower SMES further and strengthen the green finance ecosystem.