The Impact Of Green Credit On The Performance And Risk Of Commercial Banks

At present,the green development aiming at efficiency,harmony and sustainability has become an important trend of China’s economic development.On this basis,green credit emerges as the times require and becomes an important focus of banking reform and innovation.However,from the proportion of green credit,its development level is not high.Except for Industrial Bank,the control of green credit ratio of other banking institutions does not exceed 10%.In addition to policy guidance and promotion,whether green credit can bring economic effect to banks is the key to the further development of green credit.Based on corporate social responsibility theory and environmental risk theory,this paper qualitatively analyzes the impact of green credit business on bank performance and risk,and puts forward possible effect mechanism from positive effect and negative effect respectively.The analysis shows that green credit can improve the social reputation of banks and have a positive impact on their business performance;Green credit can optimize the credit structure of banks and reduce the risk that banks may face;Green credit can promote the transformation of bank customer structure,product transformation and international cooperation,and enhance the competitiveness of banks.But at the same time,green credit business may also increase the operating costs of banks;Reducing the profit margin of banks and enlarging the possible risks of banks;And it may bring business crowding out effect.Then,based on the panel data of 19 Commercial Banks in China,this paper examines the effect of green credit on the business performance and risk of commercial banks.It is found that green credit has a positive effect on the return on total assets,but the impact is relatively weak,only significant at the significant level of 10%,indicating that the relationship between the two is relatively small.And from the coefficient point of view,for every 1%increase of green credit business,the return on total assets will only increase by 0.005%,which further shows that the impact of green credit on bank profitability is relatively small.From the model results of green credit and non-performing loan rate,we can see that green credit has a significant negative impact on the non-performing loan rate.Every 1%increase in the proportion of green credit,the non-performing loan rate of banks decreases by 0.014%,and the result is significant at the significance level of 1%,which indicates that the lack of green credit business will enhance the ability of banks to deal with credit risk.Compared with the model results of green credit and return on total assets,the impact of green credit on non-performing loan ratio of commercial banks is larger and stronger.The empirical results show that green credit has significant positive economic benefits for commercial banks.It can not only improve the profitability of commercial banks,but also optimize the asset quality of commercial banks and reduce their risks.However,in the current situation that green credit has not formed scale effect,the effect of green credit on the improvement of bank performance is still relatively weak,and its more obvious impact is the control of bank risk.