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Research on the Impact of Green Credit on the Sustainable Development of Commercial Banks

Author(s)

Liang Zhao

Affiliation(s)

Monash University, Caulfield, Melbourne, Victoria 3161, Australia

Abstract

This study examines the effect of green credit on bank financial performance and risk management through empirical data analysis of 10 large commercial banks in China from 2010 to 2021. The findings reveal that the green credit ratio (GCR) significantly improves the bank's return on assets (ROA) and return on equity (ROE), while efficiently reducing the non-performing loan ratio (NPL Ratio), suggesting that green credit has a positive impact on the profitability and risk control of banks. Capital adequacy ratio (CA) is crucial for promoting financial stability and risk management in banks. The leverage ratio (LR) has a more nuanced impact on financial performance, and the interest rate (IR) positively affects profitability. The results of residual analysis show that the model fit is reasonable and the residuals are approximately normally distributed, which further verifies the reliability of the analysis results. This study's findings indicate that green credit, a key tool for promoting sustainable development in commercial banks, effectively reduces risk exposure while enhancing profitability.

Keywords

Green Credit; Financial Performance; Risk Management; Capital Adequacy Ratio; Commercial Bank

References

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