The Impact Of Green Credit On The Profitability Of Commercial Banks

Since the reform and opening up,China’s economy has developed rapidly,more and more people are aware of the importance of a good ecological environment,and the impact of a good ecological environment on people’s happiness in life is becoming more and more obvious.In such a context,the crude development model of pursuing rapid economic growth obviously cannot adapt to the times,and in order to obtain high-quality development,we must find new economic growth points and promote the comprehensive green transformation of socialist economic development.As a key force in allocating social resources and deploying capital flows,how to use financial tools to promote high-quality economic and social development has become a must-answer question in the new era.Under the condition that China’s capital market is not yet developed,commercial banks will be the main force to promote the development of green industries and green transformation of traditional industries.China’s "green credit" related policies have been introduced for 15 years,but so far,the results are very little.The People’s Bank of China has published a set of data: as of the end of the third quarter of 2022,the balance of "green credit" in China was 20.9trillion yuan,accounting for less than ten percent of the total bank loans,which fully illustrates that: the enthusiasm of commercial banks in China to carry out "green credit" needs to be improved.This fully illustrates that the enthusiasm of commercial banks in China for "green credit" needs to be improved.Meanwhile,most of the"green credit" balance is concentrated in a few large state-owned commercial banks,and the scale and proportion of the "green credit" balance of more local commercial banks are very small,not putting the green development and "green credit" policy into practice.Green credit" policy has not been put into practice.Thus,it is urgent to study the impact of "green credit" on the profitability of commercial banks in China.This paper firstly defines the concept of "green credit" and compares the relevant literature at home and abroad to gain a preliminary understanding of the current situation and problems of developing "green credit" business in commercial banks in China.Then,through theoretical analysis,we conclude that in the short term,the development of green credit business has a negative impact on the profitability of commercial banks.Finally,based on the findings of the theoretical mechanism analysis,we select 14 listed commercial banks from a large number of listed commercial banks,and use the data of these listed commercial banks for a ten-year period(2012-2021)as a sample to build a corresponding model and conduct an empirical analysis of the impact of "green credit" on the profitability of commercial banks in China.The results show that in the short term,"green credit" will have a negative impact on the profitability of commercial banks,which requires the cooperation of the government,commercial banks,and enterprises to reduce the negative impact of "green credit" and contribute to sustainable development.This will help to achieve sustainable development.