The Impact Of Green Credit On The Profitability Of Commercial Banks

Nowadays,with the rapid development of my country’s economy,environmental problems have also become prominent,becoming a "stubborn stone" on the road of economic development.How to coordinate the relationship between economy,society and environment is a problem that needs to be considered in the process of contemporary economic development.At the G20 summit,my country emphasized the importance of developing green credit.As an important part of my country’s financial industry,commercial banks have undoubtedly become an important subject in the implementation of green credit.However,a commercial bank is an enterprise whose goal is to make profits,and at the same time,it must take into account both social and economic benefits.Therefore,studying the impact of green credit on the profitability of commercial banks will help commercial banks seize the opportunity of green credit,promote their own development,and improve their competitiveness.The thesis first conducts a preliminary analysis of research results at home and abroad,and then expounds the relevant theories of green credit and commercial bank profitability,and analyzes the mechanism of green credit on the profitability of commercial banks.Then,taking 36 commercial banks in our country as the object,according to the size classification,the development status of their green credit business and profitability was studied.Finally,based on the panel data of 36 commercial banks in my country from 2007 to 2020,using the double difference model,the effect of green credit on the profitability of commercial banks and the effect of the intermediary mechanism are analyzed.The research results show that green credit has a significant positive impact on the profitability of commercial banks,which is mainly achieved through risk control mechanisms,and is part of the intermediary role.Further research shows that green credit has a long-term impact on the profitability of commercial banks,and the impact of green credit on commercial banks of different sizes is heterogeneous.Based on the above research,in order to promote the development of green credit in my country’s commercial banks,this article proposes relevant policy recommendations from the government and banks.The government level mainly implements differentiated measures for banks of different sizes;establishes strict punitive measures,improves relevant laws and regulations;improves the information disclosure mechanism of commercial banks and strengthens industry supervision.At the bank level,it is mainly to strengthen the communication mechanism with the environmental protection department to reduce business costs;to innovate green products and speed up the development of green credit;to train professionals,set up full-time departments,and strengthen the top-level design of green credit.