The Impact Of Green Credit On The Financial Performance Of Commercial Banks

When we witness the economic prosperity brought by the industrial civilization,problems such as abuse and overuse of resources,destruction and pollution of the environment are becoming increasingly prominent.The interactions to protect the environment and promote the harmonious development of humans and nature among countries throughout the world are becoming more and more frequently.Green development and sustainable development have become the theme of the current era.During recent years,China has issued relevant policies and regulations to protect the ecological environment and restrict the development of “two high and one capital”enterprises.Commercial banks that are at the core of financial asset allocation have gradually realized that ignoring environmental issues and failing to perform social responsibilities will have a negative impact on corresponding environmental risks,business risks,legal risks and reputational risks.The development model of commercial banks has also started to evolve from only focusing on economic interests to focusing on ecological environment and economic interests as well.Therefore,green credit came into being.The relationship between the implementation of green credit and financial performance determines the attitude and behavior of banks in developing green credit.This paper firstly analyzes the impact of commercial bank's practice of green credit on financial performance,and then empirically analyzes therelationship between 25 listed commercial banks' green credit and their financial performance by controlling fixed-time effects and individual fixed effects.The study found that: First,the practices of green credit can significantly improve commercial banks' financial performance and reduce their non-performing loan ratio.Second,unlike previous scholars' studies,this study found that the scale of commercial banks is negatively correlated with financial performance.The reason might be the selection of sample size and indicators.It also might be the development of Internet finance and the rise of third-party financing platforms.The impact of traditional large banks remains to be further studied.Third,although the implementation of green credit has no obvious effect on the net asset gross profit margin and net assets return rate of commercial banks lagging behind,it can significantly reduce the non-performing loan ratio in the first phase of lagging behind.Fourth,Through the robustness test,it was found that the impact of green credit on the financial performance of the four large state-owned commercial banks in China was greater than that of other commercial banks.Fifth,compared with unlisted commercial banks,listed commercial banks can practice green credit and fulfill their social responsibilities more effectively.The Industrial Bank,as the first domestic commercial bank to adopt the Equator Principles,is playing a leading role in practice and innovation of green credit.Finally,the following inspirations for commercial banks in implementing green credit and improving their financial performance are as follows: First,strengthen the training and reserve of talentsin green credit;second,innovate green credit products.Third,strengthen the construction of laws and regulations related to green credit;Fourth,establish a platform for environmental information sharing;Fifth,improve green credit incentive and restraint mechanisms;and the sixth is to regulate excessive local government intervention in bank credit business.In addition,improving the capital market,encouraging and enhancing the listing of enterprises,and creating a good green financial development environment can further promote the development of green credit.