Research On The Impact Of Green Credit On The Profitability Of Commercial Banks

With the gradual acceleration of China’s economic development,the way of exchanging environmental pollution and energy depletion for economic development has been unsustainable.In 2020,China’s carbon emissions reached 9.894 billion tons,ranking first in the world.The sustainable and coordinated development of environmental protection and economic growth has become an urgent problem to be solved.In 2002,the equator principle was put forward to convey the development concept of green finance to the world.The Chinese government also immediately took measures to release relevant policy documents on environmental protection and resource conservation,and put forward some reform and innovation opinions on the development of the financial industry,taking advocating green economy and optimizing the mode of economic growth as an important prerequisite for sustainable development.As the hub of financing,China’s commercial banks issue green credit business in response to the concept of green and lowcarbon finance,which can optimize and adjust the social industrial structure,realize the policy requirements of energy conservation and environmental protection,and realize the purpose of using financial tools to achieve the common improvement of economic and social benefits.This paper will carry out green credit business as an important financial tool for the coordinated development of environment and economy,and analyze the effect of green credit on the profitability of commercial banks through the combination of theory and demonstration,in order to provide reference for relevant researchers,promote commercial banks to actively carry out green credit business,and promote the common development of China’s environment and economy.Firstly,this paper expounds the research background and significance of the impact of green credit business on its profitability in China.By combing the relevant literature,this paper understands the relevant research results of domestic and foreign scholars on green credit and bank profitability;Then it introduces the relevant theories of green credit and the impact mechanism on the profitability of commercial banks.The development of green credit can have an effect on the bank’s credit structure,intermediate business income,asset quality,social reputation and business cost,and then affect the bank’s profitability;Then it expounds the current situation of banks’ green credit business from the aspects of credit scale,products and policies,and puts forward relevant research hypotheses according to the heterogeneity between banks and the existing problems;Then,the seven-year data of 20 commercial banks（5 large state-owned banks and 15 small and medium-sized banks）are regressed and analyzed by Stata measurement software,and the robustness test is passed.The empirical results show that:（1）the effect of green credit on the overall profitability of banks is positive,but the coefficients are small,It shows that the bank’s green credit business has only brought a small decline or growth to its profitability;（2）In the heterogeneity test,green credit has a negative correlation with the profitability of large state-owned banks and a positive correlation with the profitability of small and medium-sized banks.Finally,according to the above theoretical and empirical analysis,this paper puts forward relevant suggestions from four aspects of how to improve the green credit policy:first,improve relevant laws and regulations and establish an effective incentive mechanism;Second,improve the construction of information disclosure platform and strengthen supervision and audit;Third,do a good job in guiding public opinion,guide the public to deeply understand green credit and optimize the green credit market environment;Fourth,commercial banks need to further enrich green credit products and increase the training of professionals.It is hoped that green credit can not only promote the sustainable development of environment and society,but also improve the profitability of commercial banks and accelerate the development and transformation of banks.