ESG Responsibility,financial Innovation And Commercial Banks’ Asset Quality

Asset quality is the lifeline of commercial banks,and the factors influencing asset quality have traditionally received the attention of many scholars.In the current post-epidemic era,commercial banks’ loans are under pressure of risk exposure,while financial institutions upholding the ESG development concept have gained sustainable returns in their own business and reputation,demonstrating considerable risk resistance.Does practicing ESG philosophy as one of the important propositions for commercial banks provide a new perspective for improving asset quality and innovating business models? Therefore,this paper examines the impact of ESG responsibility on asset quality with certain theoretical and practical significance.This paper combines normative and empirical research methods,firstly,it composes the relevant domestic and international literature,analyzes externality theory,collaborative governance theory,reputation theory,agency cost theory,and enterprise competitiveness evaluation theory,constructs a theoretical analysis framework between ESG responsibility and asset quality,and proposes an empirical hypothesis based on this.Taking the data of A-share listed commercial banks division from2015-2020 as the sample,we construct an econometric model to initially test the impact of fulfilling ESG responsibility on the asset quality of listed commercial banks,based on which,we further examine the mediating role of financial innovation and the heterogeneous impact of the nature of property rights,and draw the following conclusions: first,the fulfillment of ESG responsibility by commercial banks will play a positive role on the level of asset quality,controlling other variables are relatively stable,the better the ESG evaluation,the higher the bank’s asset quality level,while financial innovation plays a mediating role in the impact;second,compared with commercial banks of central enterprise nature,the positive effect of ESG responsibility on improving asset quality is more significant for commercial banks of non-central enterprise nature.This paper further enriches the research in the field of ESG,and at the same time expands the research on the factors influencing the asset quality of commercial banks.Finally,based on the above findings,this paper puts forward policy recommendations: commercial banks should not only strengthen their own ESG responsibility construction in operation and management,but also promote better ESG construction in the whole society;commercial banks should fully recognize that fulfilling ESG responsibility is an inevitable choice to build competitive advantages based on the long term,and do their best in fulfilling ESG responsibility according to their own operation needs,and pursue long-term sustainable ESG investment;to incorporate ESG responsibility fulfillment into the financial innovation system,play an active role in financial innovation through ESG responsibility fulfillment,and enhance the ability of ESG responsibility fulfillment through financial innovation.