Green Credit’s Impact On Commercial Banks’ Profitability In China

Since the reform and opening up, the extent of opening up China’s bankingsector is also increasingly deepened, especially in the context of the rapiddevelopment of financial globalization, at a faster pace gradually into the healthy andorderly development track. In an increasingly competitive environment, theprofitability of commercial banks in China’s banking sector and become the focus ofattention of the government. But with the improvement of economic growth, thecontradiction between the environment and economic development also began togradually appear, green credit mechanism should be timely development, this paperwill focus on analysis and effective tool "green credit" to start such a sustainableeconomy, in order to commercial banks’ profitability to produce good effects, andthus for the realization of China’s green economy help.In this paper, based on the review of the relevant literature and foreign, firstintroduced the concept in detail the profitability of commercial banks. Secondly, thetheoretical analysis of the impact of Chinese commercial bank profitability andexternal factors. Establish an empirical model by theoretical analysis results, select13banks2008-2012panel data sample for analysis, the use of individual fixedeffects model regression analysis.Through this analysis, we concluded that green credit with commercial banks’profitability has a significant negative correlation, which differ materially from theresults of theoretical analysis, so how to change this short-term difficulties, increasethe contribution of green credit, resolved in the development of green credit theproblem, then develop into long-term interests, is the biggest task for us at this stage.Finally, from the perspective of five green credit business banking problems ofdevelopment in China, and the corresponding policy recommendations, we believethat with the introduction of government policies, laws and regulations to improvethe green credit for China’s commercial banks’ profitability will become increasinglyapparent affect the ability to promote the adjustment of economic structure and thetransformation of economic growth mode.