Analyzing the impact of green credit on profitability of Chinese commercial banks: Comparison of green credit loan introduction and growth stage
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In the context of the global transition to a green and low-carbon economy, China has set targets for carbon peaking and carbon neutrality, which requires the active participation of the financial industry, especially the support of commercial banks through green credit. This study aims to reveal the impact of green credit and its growth cycle on the profitability of Chinese commercial banks. This study conducts an empirical analysis using a sample of 18 listed Chinese commercial banks engaged in green credit business from 2008 to 2021. The empirical analysis results are as follows: Firstly, it is found that green credit has a significant positive impact on the profitability of Chinese commercial banks. Secondly, use 2017 as the benchmark to categorize green credit into the introduction and growth stages, indicating that the analysis shows that green credit has a greater positive impact on the profitability of Chinese commercial banks in the growth stage. These findings provide important references for policymakers and banks. The government and financial institutions should improve green credit policies, incentivize bank participation, and reduce risks. State-owned commercial banks should assume social responsibilities and promote the development of green finance.
Abstract
In the context of the global transition to a green and low-carbon economy, China has set targets for carbon peaking and carbon neutrality, which requires the active participation of the financial industry, especially the support of commercial banks through green credit. This study aims to reveal the impact of green credit and its growth cycle on the profitability of Chinese commercial banks. This study conducts an empirical analysis using a sample of 18 listed Chinese commercial banks engaged in green credit business from 2008 to 2021. The empirical analysis results are as follows: Firstly, it is found that green credit has a significant positive impact on the profitability of Chinese commercial banks. Secondly, use 2017 as the benchmark to categorize green credit into the introduction and growth stages, indicating that the analysis shows that green credit has a greater positive impact on the profitability of Chinese commercial banks in the growth stage. These findings provide important references for policymakers and banks. The government and financial institutions should improve green credit policies, incentivize bank participation, and reduce risks. State-owned commercial banks should assume social responsibilities and promote the development of green finance.
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