The determinants of green credit and its impact on the performance of Chinese banks

Yin W., Zhu Z., KIRKULAK ULUDAĞ B., Zhu Y.

JOURNAL OF CLEANER PRODUCTION, cilt.286, 2021 (SCI-Expanded) identifier identifier

  • Yayın Türü: Makale / Tam Makale
  • Cilt numarası: 286
  • Basım Tarihi: 2021
  • Doi Numarası: 10.1016/j.jclepro.2020.124991
  • Dergi Adı: JOURNAL OF CLEANER PRODUCTION
  • Derginin Tarandığı İndeksler: Science Citation Index Expanded (SCI-EXPANDED), Scopus, Academic Search Premier, PASCAL, Aerospace Database, Business Source Elite, Business Source Premier, CAB Abstracts, Communication Abstracts, INSPEC, Metadex, Pollution Abstracts, Public Affairs Index, Veterinary Science Database, Civil Engineering Abstracts
  • Anahtar Kelimeler: Green credit, Bank's performance, Chinese banks, CORPORATE SOCIAL-RESPONSIBILITY, ENVIRONMENTAL RISK-MANAGEMENT, FINANCIAL PERFORMANCE, EQUATOR PRINCIPLES, SUSTAINABLE FINANCE, COMMERCIAL-BANKS, ADOPTION, INDUSTRY, PRIVATE, POLICY
  • Dokuz Eylül Üniversitesi Adresli: Evet

Özet

This paper investigates the determinants of the green credit ratio (GCR), and the impact of green credits on the profitability and credit risk of Chinese banks. This study uses bank-level data over the period 2011 -2018 and it applies the Generalized Method of Moments (GMM). The present paper contributes to the understanding of green credit policy in China by examining the determinants of GCR, and its relationship with bank's profitability and credit risk. Our findings document that large and profitable banks tend to lend more green credits. Interestingly, there is no significant impact of bank risk on GCR. In other words, risk management is not a significant barrier for banks issuing green credits. We show that state-owned banks are more likely to lend green credits, which is supported by our finding that China's decisive attitude towards green credit policy is so strong that the bank's risk does not matter for the green credit lending policy. Moreover, green lending practices have a significant impact on the profitability and risk faced by these banks. One of the most striking findings of this paper is that while green lending increases the profitability of non-state-owned banks and reduces their risk, state-owned banks provide green credits at the expense of their profitability. This can be attributed to the Chinese government's ambition to push state-owned banks to play a key role in green lending. (c) 2020 Elsevier Ltd. All rights reserved.