Research On The Impact Of Green Credit On Bank’s Operating Performance

Green finance is the result of China’s profound reflection on environmental pollution and ecological destruction caused by extensive economic growth during the period of reform and opening up.It is an important way for China to achieve economic development,social progress and ecological harmony under the new economic normal.It is also China’s active.One of the policy manifestations of the implementation of the new Paris Agreement.The importance of green finance is self-evident.The number of times it has been mentioned in the fields of economy,politics,society,and people’s livelihood is very high.President Xi Jinping also proposed in the report of the 19 th National Congress to "strive to develop green finance and strengthen.We will not advance the construction of ecological civilization,and "resolutely fight the tough battle to prevent and resolve major risks,accurately lift poverty,and prevent pollution."Although the practice of green finance has been short in China,it has been carried out in various forms in various fields.The largest proportion of commercial banks is the green credit business of commercial banks,which constitutes a major part of China’s green finance practice.Up to now,the overall scale of domestic green credit has increased year by year.When the scale of traditional credit business shrinks,it maintains a compound growth rate superior to that of other businesses.It has gradually become an important business in the banking industry to enhance the competitiveness of the company and optimize the overall asset structure.one.Based on the background of the new era of green financial policy,this paper studies the impact of commercial banks’ green credit business on their business performance.Through the background discussion,theoretical research and empirical analysis,a theoretical and data-supported conclusion is drawn.The first part is the introduction,which introduces the background and significance of the implementation of green credit business by domestic banks,and comprehensively discusses related literatures at home and abroad,paving the way for theoretical analysis and empirical analysis.Secondly,it introduces the origin and development of domestic green credit,and points out the problems existing in the current green credit business.Then,it demonstrates two core concepts and theoretical foundations of green credit business and bank operation performance,and analyzes the theoretical mechanism of commercial bank green credit business affecting its business performance from the perspective of profitability and risk.Finally,the empirical test part is modeled and analyzed by means of unit root test,F test,Hausmann test and robustness test.This paper draws the following two conclusions:(1)The rapid development of green credit business,but still needs to improve institutional norms.Through the current domestic green credit policy and commercial bank green credit business practice,China has already established a relatively systematic green credit system,but lacks more detailed implementation rules and a clear implementation of the green credit business supervision agency.Judging from the practice of green credit business of domestic banks,most large banks in China have carried out green credit business under the guidance of policies.The domestic business stock has risen steadily,and the internal institutional arrangements have also undergone a series of revisions;although “two high ones” The total amount of credit in the industry remains large,but it basically restricts the credit approval of such customers.At present,only the stock management is carried out,and the increment is strictly controlled.For the heavily polluting and surplus industries,even the environmental protection one-vote veto is implemented.system.Therefore,in general,China’s current green credit business has grown steadily.However,due to institutional and policy reasons and the arrangements of various banks,most small banks have not yet launched green credit business.The enthusiasm of green credit business still needs further development.The relevant business system of credit needs to be further regulated.(2)Green credit is not conducive to profitability in the short term,but it can significantly reduce bank risks.The bank’s operating performance in this paper mainly includes the following two connotations: the first is the bank’s profitability,and the second is the bank’s risk management capability.Through empirical analysis,it is found that the bank’s green credit business is not conducive to the bank’s profitability in the short term.The possible reasons are as follows: First,the time for China’s banks to carry out green credit business is short,the short-term cost effect is significant and the long-term profit effect has not yet appeared.Second,the development of China’s green credit is in its infancy,the market is not yet mature,and the relevant systems are not perfect,and the incentive system is not perfect,which will result in banks not being able to improve their profitability in the short term.Third,the paper selects the data for the 10 years from 2009 to 2018.The short time period can only reflect the impact of green credit on profitability in the short term.In addition,the green credit business is negatively related to the bank’s risk status.Its strong “environmental risk control preference” is an effective measure for the banks themselves to reduce the non-performing asset ratio and improve the quality of credit assets,which can significantly enhance the bank’s risk management level.Based on the above theoretical and empirical analysis,this paper proposes the following policy recommendations.First,banks should comply with the development trend of green finance and actively carry out green credit business.Second,relevant departments should further improve policy legislation and promote implementation rules.Third,we must improve information communication mechanisms and establish a compliance environmental information sharing system.Fourth,actively promote the "Equator Principles" and establish a green credit incentive mechanism at the regulatory level;finally,carry out credit product innovation and promote green financial development.