Research On The Effects Of Green Credict On Bank's Profitability

Green credit adjust the industrial structure with the financial strength,compared to the original direct administrative regulation and the tax regulation,green credit is more flexible,targeted,more in line with the principles of market regulation.The direct motivation of the bank to carry out green credit comes from its impact on their profitability.First,this paper analysis the theme in theory.The bank carrying out the green credit will increase its operating costs,thereby reducing its profitability,but to carry out green credit can effectively reduce bank's environmental risk and social risk,so as to reduce the rate of non-performing loans,thus reducing their loan loss.And composition of these two opposite forces decides whether bank to carry out green credit or not.Taking the Bank of China and other 14 banks in 2009-2014 for sample,this paper conduct analysis from two different angles—business management fees and the rate of non-performing loans.The main contents are as follows:(1)research green credit's impact on banks business management fees.Through the stationary test,analysis of covariance and Hauseman test,the author ultimately determines to use random effects regression model.The empirical results show that green credit will increase the cost of its units management fee.(2)research green credit's impact on bank's non-performing loans rate,through the stationarity test and the covariance analysis,the author finally determine the regression model with Pooled Least Squares.Empirical results show that the development of green credit will reduce the rate of non-performing loans.(3)research bank's management costs and the rate of non-performing loans impact on its operating profit,through the stationary test and analysis of covariance.The author ultimately determine the use of Pooled Least Squares regression model.The empirical results show that the higher the bank's business and management costs is,the lower the profitability of the bank is,while the higher the rate of non-performing loans is,the lower the profitability of the bank is,the role of green credit to decrease profitability is more significant,therefore,to carry out green credit may decrease the profitability of banks in the present stage.Finally,based on all the empirical results the author give a conclusion and the corresponding policy recommendations.