The Impact Of Green Credit On The Credit Risk Of Commercial Banks

The rapid development of the economy has brought a rapid improvement in the standard of living material of the people,but it will inevitably be accompanied by serious natural ecological damage and other problems.So governments began to realize the seriousness of environmental problems,and the economic growth brought by the sacrifice of the environment is bound to be unsustainable,and it also brings survival crisis for future generations.As a result,China has also started to change its development direction from the traditional high economic growth to high quality development and sustainable economic growth.To emphasise sustainable economic development,China has proposed a green credit policy to promote energy-saving and emission reduction projects through credit instruments,strengthen strict credit assessment of high energy consumption and high pollution projects,reduce the number of "two high and one surplus" enterprises at source,and vigorously promote the development of green enterprises.For the first time,green credit incorporates environmental issues into economic development from the perspective of financial institutions.Banks,as the main financial institutions in China,play a crucial role in the development of green credit.Banks pay particular attention to riskiness,then the extent of the impact of the development of green credit on the credit risk of commercial banks has also become a hot topic of discussion,while the choice of green credit may differ among banks with different ownership,so it is of practical significance to conduct a study on this in this paper.Theoretically speaking,green credit has a dual impact on bank credit risk: on the one hand,banks actively carry out green credit business,adopt strict pre loan audit and in loan management procedures,reduce the bank’s credit risk from the source.On the other hand,green credit projects are mostly new energy and high-tech projects,which have high risks and low return on investment.Compared with traditional enterprises,they have higher risks,thus increasing the credit risk of banks.Therefore,it is the research objective of this paper to sort out and explore the mechanism and strength of the impact of green credit on the credit risk of commercial banks in China.In this article,the author considers green credit as a research material and first explains the concepts and theoretical background related to green credit.;secondly,it puts forward the corresponding assumptions through the analysis of the impact mechanism,and finally makes an empirical analysis through data collection.This paper selects a total of 26 different types of commercial banks’ panel data from2004 to 2019,and uses a double differential model to analyze the net impact of green credit policies on the credit risk of commercial banks.According to empirical results,the green credit policy affects the credit structure,this will increase the non-performing loan ratio of commercial banks,but the dampening effect of the reputation and innovation mechanisms could hamper the impact of green credit on commercial banks’ credit risk.In addition,through the marginal dynamic effect model,this paper finds that the improvement of non-performing loan ratio by green credit is gradually decreasing.Therefore,in the long run,with the further development of reputation mechanisms and innovation mechanisms,green credit business will allow banks to have lower credit risks.At the same time,according to the heterogeneity of banks,the overall sample is divided into banks of different ownerships.Through empirical findings,the larger the scale of green credit,the smaller the credit risk of state-owned banks and the greater the credit risk of joint-stock banks.Finally,considering the empirical situation and the actual development of green credit in China,the corresponding solutions are put forward.