The Impact Of Green Credit On The Profitability Of Commercial Banks

In recent years,China’s economic development has shown a trend of steady growth,but the excessive pursuit of economic development has also led to a series of environmental damage and pollution problems,the conflict between economic growth and environmental protection is constantly intensified.It should be the right direction for China’s economic development to change the past development pattern,promote economic transformation and upgrading,and realize green,low-carbon and environmentally friendly development.Green credit is an important part of China’s green finance system,and its development level directly affects the quality of China’s green finance development.The realization of the goal of "carbon peak and carbon neutral" contains a large number of green financing needs,and the development of green credit is an important means of green finance to achieve the goal of "carbon peak and carbon neutral".Commercial banks play an important role in the development of green credit in China.Therefore,it is of certain practical significance to discuss the impact of green credit on the profitability of commercial banks.By studying the relationship between green credit and profitability of commercial banks,it can provide beneficial guidance for the further development of green credit business of commercial banks.If green credit plays a positive role in promoting the profitability of commercial banks,then green credit is beneficial to their own operation and future development.Commercial banks will have enough positive incentives to carry out green credit business and will take the initiative to shoulder their social responsibilities.Based on the research results of outstanding scholars at home and abroad,this paper discusses the relationship between green credit business and profitability of commercial banks in China.In the theoretical analysis part,this paper first introduces the connotation of green credit and profitability of commercial banks;Then,the relevant theoretical basis for commercial banks to carry out green credit is expounded.Finally,four mechanisms of the impact of green credit on the profitability of commercial banks are discussed,including increasing business costs,optimizing credit structure,gaining green reputation and changing credit risks.In the part of the status quo and profitability of green credit in China’s commercial banks,the development status and existing problems of green credit in China are described as a whole,and the profitability of commercial banks are introduced.In the empirical analysis part,this paper adopts the fixed effects panel model,and the results show that green credit has a certain negative effect on the overall profitability of commercial banks.In the further research,commercial banks are classified according to different types and the heterogeneity of commercial banks is analyzed.The research draws the following conclusions: First,green credit has a positive effect on the profitability of state-owned commercial banks;Second,green credit has a negative effect on the profitability of joint-stock commercial banks;Third,green credit also has a negative effect on the profitability of urban commercial banks,but the empirical results are not significant.According to the results of empirical analysis,this paper draws relevant policy suggestions to promote the development of green credit in commercial banks from the government level and the level of commercial banks.The government should improve the laws and regulations on green credit,implement differentiated incentive mechanism and promote international cooperation on green credit.Commercial banks should vigorously cultivate green credit professionals,strengthen green credit product innovation and make use of the power of fintech to fulfill their social responsibility to protect the ecological environment and focus on long-term profits.At present,the development of green finance is the general trend.With the vigorous advocacy of government departments and the voluntary assumption of social responsibilities by banks,the green credit business of commercial banks will continue to develop and the proportion of green credit will steadily increase.Commercial banks should actively serve the real economy,gradually expand from traditional business to green finance,focus on green credit business,and continuously improve their own operating level and profitability.Through green credit business,reduce loans to high energy consumption and high pollution industries,promote the coordinated development of economic benefits and ecological benefits,and promote the smooth realization of the goal of "carbon peak and carbon neutrality".