IDEAS home Printed from https://ideas.repec.org/a/spt/admaec/v13y2023i2f13_2_5.html
   My bibliography  Save this article

An Empirical Study on the Impact of Green Credit on Financial Performance of China’s Listed Banks

Author

Listed:
  • Luqi Yuan
  • Shihong Zeng

Abstract

The concept of green environmental protection and sustainability is deeply rooted in China. Green credit has become an important social issue in recent years. Most Chinese financial institutions are also actively participating and investing in this field, especially banks. In order to explore the correlation between banks' participation in green credit business and banks' financial performance, this paper collects the green credit balance, green credit ratio, return on total assets, non-performing loan ratio and other data of 16 major listed commercial banks in China from 2011 to 2019. At the same time, econometric modelling is built using the system GMM regression analysis method. This focuses on the impact of commercial banks' green credit business on their profitability. The final research results certify that banks' increasing investment in green credit has a positive impact on promoting profitability, both showed a positive correlation. Therefore, this paper suggests that banks should focus on the development of green credit business, which is beneficial to both the financial performance of banks and the construction of an environmentally sustainable society. Â JEL classification numbers: P34.

Suggested Citation

  • Luqi Yuan & Shihong Zeng, 2023. "An Empirical Study on the Impact of Green Credit on Financial Performance of China’s Listed Banks," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 13(2), pages 1-5.
    • Handle: RePEc:spt:admaec:v:13:y:2023:i:2:f:13_2_5
    as

    Download full text from publisher

    File URL: http://www.scienpress.com/Upload/AMAE%2fVol%2013_2_5.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jintao Zhang & Zhen Yang & Li Meng & Lu Han, 2022. "Environmental regulations and enterprises innovation performance: the role of R&D investments and political connections," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(3), pages 4088-4109, March.
    2. Jian Hao & Lin Chen & Na Zhang, 2022. "A Statistical Review of Considerations on the Implementation Path of China’s “Double Carbon” Goal," Sustainability, MDPI, vol. 14(18), pages 1-21, September.
    3. Van-Thep Nguyen & Day-Yang Liu, 2019. "Factors affecting the level of depositors’ satisfaction towards the services of commercial bank: Evidence from Vietcombank, Can Tho branch, Vietnam," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 9(6), pages 1-2.
    4. Zhou, Guangyou & Sun, Yongkun & Luo, Sumei & Liao, Jiayi, 2021. "Corporate social responsibility and bank financial performance in China: The moderating role of green credit," Energy Economics, Elsevier, vol. 97(C).
    5. Xiaoyan Gao & Yiyang Guo & Jianxu Liu, 2022. "The Green Credit Policy Impact on the Financial Performance of Commercial Banks: A Quasi-Natural Experiment from China," Mathematical Problems in Engineering, Hindawi, vol. 2022, pages 1-16, November.
    6. Duong Thuy Phan & Trong Tai Nguyen & Thi Thanh Hoang, 2022. "Impact of income diversification on the business performance of Vietnamese commercial banks," Cogent Business & Management, Taylor & Francis Journals, vol. 9(1), pages 2132592-213, December.
    7. Kiviet, Jan F. & Kripfganz, Sebastian, 2021. "Instrument approval by the Sargan test and its consequences for coefficient estimation," Economics Letters, Elsevier, vol. 205(C).
    8. Junxiu Sun & Feng Wang & Haitao Yin & Bing Zhang, 2019. "Money Talks: The Environmental Impact of China's Green Credit Policy," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 38(3), pages 653-680, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yuan, Na & Gao, Yihong, 2022. "Does green credit policy impact corporate cash holdings?," Pacific-Basin Finance Journal, Elsevier, vol. 75(C).
    2. mohammed, habib, 2023. "Modeling Determinants of Private Banks Profitability in Ethiopia," MPRA Paper 116699, University Library of Munich, Germany.
    3. Tan, Xiujie & Xiao, Ziwei & Liu, Yishuang & Taghizadeh-Hesary, Farhad & Wang, Banban & Dong, Hanmin, 2022. "The effect of green credit policy on energy efficiency: Evidence from China," Technological Forecasting and Social Change, Elsevier, vol. 183(C).
    4. Saba Iqbal & Safia Nosheen, 2023. "Moderating impact of non-performing loans on the relationship between sustainable development goals and the financial performance of banks," Future Business Journal, Springer, vol. 9(1), pages 1-12, December.
    5. Ge, Yongbo & Zhu, Yuexiao, 2022. "Boosting green recovery: Green credit policy in heavily polluted industries and stock price crash risk," Resources Policy, Elsevier, vol. 79(C).
    6. Qian, Shuitu & Yu, Wenzhe, 2024. "Green finance and environmental, social, and governance performance," International Review of Economics & Finance, Elsevier, vol. 89(PA), pages 1185-1202.
    7. Liu, Suyi & Jin, Justin & Nainar, Khalid, 2023. "Does ESG performance reduce banks’ nonperforming loans?," Finance Research Letters, Elsevier, vol. 55(PA).
    8. Yang, Xiaoran & Ran, Rong & Chen, Yejing & Zhang, Jie, 2024. "Does digital government transformation drive regional green innovation? Evidence from cities in China," Energy Policy, Elsevier, vol. 187(C).
    9. Hasan, Mostafa Monzur & Wong, Jin Boon & Al Mamun, Mohammed Abdullah, 2022. "Oil shocks and corporate social responsibility," Energy Economics, Elsevier, vol. 107(C).
    10. Huang, Jingjing, 2022. "Corporate social responsibility and financial performance: The moderating role of the turnover of local officials," Finance Research Letters, Elsevier, vol. 46(PB).
    11. Fan Xia & Jiaying Chen & Xue Yang & Xiaoliang Li & Bing Zhang, 2023. "Financial constraints and corporate greenwashing strategies in China," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(4), pages 1770-1781, July.
    12. Danisman, Gamze Ozturk & Tarazi, Amine, 2024. "ESG activity and bank lending during financial crises," Journal of Financial Stability, Elsevier, vol. 70(C).
    13. Yiling Zhu & Tong Zhao, 2022. "Exploring the Role of Environmental Regulation and Technological Innovation in Financial Performance: Evidence from Chinese Heavy-Polluting Industry," Sustainability, MDPI, vol. 14(16), pages 1-18, August.
    14. He, Feng & Duan, Lin & Cao, Yi & Wen, Shuyang, 2024. "Green credit policy and corporate climate risk exposure," Energy Economics, Elsevier, vol. 133(C).
    15. Zhou, Guangyou & Zhu, Jieyu & Luo, Sumei, 2022. "The impact of fintech innovation on green growth in China: Mediating effect of green finance," Ecological Economics, Elsevier, vol. 193(C).
    16. Lin Zhang & Xiaochen Zhang & Jingjing An & Wei Zhang & Jingshen Yao, 2022. "Examining the Role of Stakeholder-Oriented Corporate Governance in Achieving Sustainable Development: Evidence from the SME CSR in the Context of China," Sustainability, MDPI, vol. 14(13), pages 1-22, July.
    17. Nina Sinitin & Adela Socol, 2021. "Does the Disclosure of Performance Indicators Impact Bank Profitability? Empirical Study for the Romanian Banking System," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 1153-1160, December.
    18. Xinyu Wang & Yuanze Chai & Wensen Wu & Adnan Khurshid, 2023. "The Empirical Analysis of Environmental Regulation’s Spatial Spillover Effects on Green Technology Innovation in China," IJERPH, MDPI, vol. 20(2), pages 1-14, January.
    19. Luo, Sumei & Yu, Shenghui & Zhou, Guangyou, 2021. "Does green credit improve the core competence of commercial banks? Based on quasi-natural experiments in China," Energy Economics, Elsevier, vol. 100(C).
    20. Junaid Aftab & Nabila Abid & Huma Sarwar & Anam Amin & Mahsa Abedini & Monica Veneziani, 2024. "Does corporate social responsibility drive financial performance? Exploring the significance of green innovation, green dynamic capabilities, and perceived environmental volatility," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(3), pages 1634-1653, May.

    More about this item

    Keywords

    Green credit; Green credit; Bank financial performance.;
    All these keywords.

    JEL classification:

    • P34 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Finance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spt:admaec:v:13:y:2023:i:2:f:13_2_5. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Eleftherios Spyromitros-Xioufis (email available below). General contact details of provider: http://www.scienpress.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.