A Study On The Motivation And Economic Consequences Of Commercial Banks Issuing Green Bonds

In recent years,China’s economy has been on the rise and the quality of life of its residents has been improving,but this model of development by consuming resources has also brought serious damage to our ecological environment.The awareness of environmental protection has gradually increased and countries have put forward the concept of green economic development based on the recognition of the drawbacks in the traditional development model.At the 19 th National Congress,China explicitly requested to increase the development of green finance,and the 20 th National Congress once again mentioned that China’s high-quality development is inseparable from the green transformation of the economy.The status of green finance in China’s development has been increasing,and new products such as green credit and green bonds have emerged.In recent years,as the country continues to launch policies to support green bonds,the scale of the green bond market has been increasing.The banking industry,as an important part of society,should also actively develop green business,realise green transformation,incorporate green responsibility into its own development period strategy,play a guiding role,allocate more funds from society to green projects,and inject surging momentum into the further development of green finance.Green bonds are one of the effective ways for banks to achieve green transformation.As a financing tool with green attributes,they exist to help green industry projects solve their funding problems and are a powerful financing method in the field of green finance,so the banking industry has been scrambling to issue them.Huaxia Bank has elevated green development to a strategic position and incorporated green bonds into its important business.In 2020,Huaxia Bank successfully issued the first issue of green bonds,and the interest rate of the bonds was only 2.08%,the lowest ever,achieving remarkable results in the field of green bonds.This paper selects the "20 Huaxia Bank Green Finance 01" issued by Huaxia Bank as a case study and focuses on the motivation for issuing green bonds and the economic consequences for the bank.Firstly,the background and significance of this paper are explained,and the research results of green bonds by scholars at home and abroad are reviewed to clarify the relevant concepts and theories.Next,the basic situation of China’s green bond market development and green bond issuance by commercial banks is introduced.Then,the basic situation of Huaxia Bank is introduced as well as the process of issuing green bonds and bond information of Huaxia Bank,and the motives for issuing green bonds are analysed from both internal and external aspects;the impact of issuing green bonds on the market performance of Huaxia Bank is studied by selecting a specific event period;the changes in profitability,liquidity,asset quality and growth capacity of the bank before and after issuing green bonds are analysed longitudinally,and the relevant indicators are compared with those of the bank.The changes in profitability,liquidity,asset quality and growth capacity of the bank before and after the issuance of green bonds are analyzed longitudinally,and the relevant indicators are compared with those of comparative banks and the industry average.Finally,the conclusions and insights of the study on the issuance of green bonds by Huaxia Bank are summarised.Through analysis,this paper finds that Huaxia Bank’s issuance was mainly due to four major reasons: strong support from national policies,helping to build a green image,reducing financing costs and achieving differentiated competition.In terms of share price effect,the issuance of green bonds did not bring an obvious positive market reaction to Huaxia Bank,but to a certain extent,it mitigated the negative reaction brought by the epidemic to the bank;in the long term,the issuance increased the bank’s liquidity,slightly improved profitability,asset quality and growth capacity,but did not have a significant improvement effect,and brought obvious environmental benefits to society,enhancing the bank’s social status and market value.It also makes recommendations based on the problems identified in this study,both at the government level and at the bank level.It is hoped that the findings of this paper will provide some reference and lessons for other commercial banks to develop green finance and issue green bonds.