Research On Market-Oriented Environmental Financial Innovation

Environmental finance is the financial industry’s creative financial model in response to the environment protection need, which can play an important role in promoting the sustainable economic growth. To meet the China’s economic growth model transforming requirements and handle the huge resources and environment pressure, China must realize the sustainable development, focusing on both economic growth and environment protection, and realize the transformation to the comprehensive use of market-based method administrative method. Under this background, the development of environmental financial innovation from the perspective of government and market relationship is the inevitable choice to achieve sustainable financial development. The study of the market-oriented environmental financial innovation has important theoretical and practical significance.The paper puts forward the research idea of the market-oriented environmental financial innovation, and explores the innovation of the market-based environmental financial management tools and the commercial financial institution’s environmental financial innovation on the risk and return balance principals. In the introduction,the paper makes a literature review of the environmental finance at home and abroad, points out the research significance of market-oriented environmental financial innovation, and then proposes the research objective, the research content and research method, which supporting the framework of this study.In the theoretical analysis section, the paper first summarizes the theoretical basis of environmental financial innovation.The theory of sustainable development, the sustainable financial theory, financial innovation theory are reviewed, and government and market relationship theory, policy finance theory, corporate social responsibility and stakeholder theory are reviewed as well as.On the basis of literature review, the paper explores the concept, feature and classification of environmental finance. The paper points out market-based environmental finance management innovation and offensive commercial environmental finance innovation should be defined as market-oriented environmental fiancial innovation, which shoud be the tendency and objectives for the environmental finance. By using the basic theory of financial innovation, the paper carries on the motivation analysis on environmental finance innovation, and discusses the functions of policy environmental finance to foster the demand of and supply of the environmental finance innovation and the innovation’s diffusion. In the mechanism analysis, the paper explores the policy environmental finance funds support and guiding function, and expansion and the leverage effect to the commercial environmental finance innovation. Combining the low carbon projects financing bottleneck in bankability and technological cycle, the paper explores the ways that policy environmental finance can leverage the commercial environmental finance.In the international experience analysis section, the paper analyzes the international practice of policy and commercial environmental finance innovation and summarizes the experience. In general the European and the US banking sector and capital market environment have a relatively leading position in this field, which can give useful experience in the banking products, financial market environmental finance innovation. The multilateral international financial institutions and some national policy banks have innovated different tools to change the risk and demand position of the environmental finance innovation, which stimulates the commercial environmental finance, and creates leverage expansion effect.The paper then analyzes the status quo of China’s environmental finance innovation. After evaluation the commercial banks’ green credit status and the fiscal performance for the environmental responsibility behavior, the paper points out that the innovation of environmental finance of commercial banks in China is still at a very preliminary stage. Through empirical research on the social responsible investment funds and social responsibility index performance, the paper shows that the performance of environmental responsibility investment is not lower than the traditional f investment. So it is necessary to explore the underlying reason why the commercial environmental finance cannot develop to the mainstream form. The policy banks are the main channel to manage the environmental finance, but Chinese policy environmental finance is still relatively weak at marketed-oriented operation. In the last part, the paper puts forward the suggestions to the improvement of the outer conditions of market-oriented environmental finance innovation, proposes the measures that should be taken to create market-based policy environmental finance tools, and to encourage the commercial banks and capital market offensive environmental financial innovation.