The Impact Of Green Credit On The Performance Of Commercial Banks

Since the reformation,China's economy has grown rapidly,but the ecological environment has been seriously damaged.In the "two sessions" in 2017,it was mentioned that we must resolutely fight against the blue sky,build an ecological civilization,and achieve green development.Therefore,to achive coordinated ahivement of economic and environment,China needs to adjust its economic growth mode.The financial institution plays a vital role in the development of China's economy.Therefore,how to use financial means to protect the environment is an urgent problem we need to solve.The commercial bank is the core of financial institutions and the main cause of social financing.And it can control the flow of credit,when it reduces the loans to the “two high and one surplus” enterprises while allowing more funds to flow to environmentally friendly enterprises.This is green credit.On the one hand,the implementation of green credit is conducive to environmental protection and resource allocation,and on the other hand,it provides a new idea for the sustainable development of commercial banks themselves.However,commercial banks are enterprises with the primary purpose of profit.When green credit can promote the improvement of commercial banks' performance,more and more commercial banks will actively participate.Therefore,it is very important to study the impact of green credit on the performance of the bank.This paper first systematically sorts out and analyzes the relevant literatures on green credit,commercial banks' performance and structure.Based on the theory of green credit,environmental economics and Porter theory…this paper studies the impact of the green credit to the performance of banks.And the conclusion is that green credit has an impact on the profitability,security,liquidity and growth of commercial banks,thus affecting the bank's performance.After that,the adjustment effect of the governance structure is analyzed,because the good governance structure can make the operation of the green credit more efficient and standardized,it will affect the bank's performance.The paper also explains the current development status of the green credit,that is,the green credit-related policies are increasingly perfect,and various banks are also actively responding.They are striving for the product innovation.Untill June 2017,China's 21 major banks have created green credit valued 8.30 trillion yuan.After qualitative analysis,this paper conducts empirical research on the data of 16 A-share listed commercial banks in 2010-2017,and quantitatively analyzes the impact of green credit on the performance of commercial banks in China.By the factor analysis,we can get the commercial bank's business performance and safety factor,growth factor,profitability factor and liquidity factor.Then the sample bank is divided into joint-stock banks and non-shares according to the nature of property rights.in addition,through the dynamic sub-samples,we can know whether the impact of green credit on performance will increase with the implementation of policy implementation time.Finally,the score of bank governance structure obtained by factor analysis is added to the model as the regulatory variable.We can find that the implementation of green credit by commercial banks has a significant positive impact on the performance,and is mainly influenced by safety and growth factors,because although the implementation of green credit will increase management costs and reduce the scale of loans,Green credit can reduce the risk of bad debts in the future,and the environmental protection enterprise has great potential.In the future,it will bring more business to banks and improve bank's performance.The revenue generated by the green credit business is greater than the cost,which promotes the improvement of banks' performance.Moreover,as the green credit business grows,the impact on the banks' performance will increase,because the longer the business is carried out,the more familiar the staff is to the business,the higher the work efficiency,the lower the economic and time cost,the business performance promotes.At the same time,compared with non-shareholding commercial banks,green credit has a stronger role in promoting the performance of joint-stock commercial banks,because compared with non-shareholding banks,joint-stock banks are under greater pressure,the system is more flexible,and they are motivated and capable of reducing the cost and improving performance.Finally,by adding the bank governance structure to the model,we know that the governance structure will promote the impact of green credit on business performance,because a good governance structure can make bank staff more fair and normative when conducting green credit business.Based on the research conclusions,this paper gives some suggestions.