The Impact Of Green Credit On Profitability Of Commercial Banks

With the development of economy and society,people’s demand for the quality of life is higher and higher,and the voice for a good ecological environment is also more and more loud.At the same time,it is also facing big problems for economic growth.The economic goal has exchanged from the growth of quantity to the growth of quality.The previous mode of development cannot support the continued economic growth,and finding new economic growth points is still the main problem of China’s economy.Developing green industry have become the inevitable demand to solve the new social contradictions and achieve the high quality of economic growth in our country.In 2007,relevant departments issued "Green Credit" policy document.Up to now,13 years have passed.However less than half of the banks have carried out the policy.Why are banks reluctant to implement Green Credit Policy?So it is necessary to study the relationship between green credit and the profitability of commercial banks.This paper first collates the relevant literature in order to grasp the specific background,development status and problems of green credit in China.And then we research the possible effect of green credit on commercial banks by using relevant theories.According to the theory analysis,if commercial banks develop green credit business,it is both possible to attain excess return or less profit.Under the circumstances,we select some bank data to do deep analysis.Our sample originates from China Stock Market&Accounting Research Database and there are 106 banks in total.We only retain the data from 2008 to 2019 because the green credit policy was born in 2007.Our analysis method is time-varying DID.So the sample banks are divided into two parts,the control group and the experimental group.And the policy push point is identified by the first year of public disclosure for the green credit data.The conclusion is banks that carried out the green credit attain excess return and the more green credit was granted,the more profit banks win.In summary,we think implementing green credit can enhance the profitability of commercial banks.According to the conclusion,we proposed some advice for promote the process of China green credit.