Credit Risk Management, ESG, and Bank Performance: Survey Evidence on Mediating and Moderating Effects from Vietnam (International Journal of Management and Sustainability)

Summary

• An integrated model of five determinants of credit risk management and bank performance, with ESG as a boundary condition, is tested with PLS-SEM on survey data from 311 banking professionals at Vietnamese commercial banks.p.1
• The strongest indirect paths are CAM to CRM to PCB (β = 0.134) and OE to CRM to PCB (β = 0.129), and the weakest is ER to CRM to PCB (β = 0.015).p.11
• Credit risk management has a statistically significant but practically negligible direct effect on bank performance (β = 0.017, p = 0.001; f² = 0.034).p.11
• The model fit measure RMSθ is 0.104, slightly above the suggested value of 0.10, so fit is acceptable but not the best.p.10
• Harman's single-factor test shows the first unrotated factor accounted for less than 50% of the variance.p.8

Key insights

1. The effects of organizational and operational variables on bank performance are largely channeled through credit risk management rather than directly.p.11
2. Because n = 311 boosts sensitivity to trivially small effects, the direct CRM effect (f² = 0.034) is small by Cohen conventions.p.11
3. Some construct pairs show high HTMT values, such as CAM–CRM (0.816), MRA–CRM (0.825) and ER–OE (0.877), indicating possible conceptual overlap.p.10
4. H8 is supported, with ESG significantly moderating the relationship involving credit risk management.p.11
5. ESG was modeled as a first-order reflective construct because the retained items per dimension were too few for a second-order structure.p.6
6. Because the study uses cross-sectional survey data, the PLS-SEM estimates capture associations rather than causal effects.p.8