The Higher Carbon Intensity of Loans, the Higher Non-Performing Loan Ratio: The Case of China

Guan, Rong; Zheng, Haitao; Hu, Jie; Qi, Fang; Ruo-en, Ren

doi:10.3390/su9040667

Cited by 18 publications

(10 citation statements)

References 25 publications

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“…Because of the correlation between sustainability performance and financial performance, it not only contributes to improving the industry's environmental and social performance, but also to its financial performance. This finding is in line with the goals of the ERM and other financial industry sustainability regulations, such as the Chinese Green Credit Policy [7][8][9][10]. However, to increase the influence of the banking industry on sustainable development, a more long-term sustainability orientation is needed [92] that is supported by investments in sustainability performance.…”

Section: Discussionsupporting

confidence: 73%

“…Furthermore, there is a gap in the knowledge about the connection between sustainability performance and the financial performance of banks in countries with such policies. Most of the studies published so far address the Chinese Green Credit Policy [6][7][8][9][10]. Those studies found a positive effect of green banking activities, such as green lending and the financial performance of the financial institutions.…”

Section: Introductionmentioning

confidence: 99%

“…Zhao and Xu [59] state that the Green Credit Policy will increase green lending and consequently contribute to sustainable development. Additionally, studies that analyzed the sustainability performance of Chinese banks found that banks with a higher green lending ratio and higher sustainability performance are exposed to lower risks [7][8][9]. Jiguang and Zhiqun [60] are more critical and claim that additional regulations and internationalization is needed to promote green finance, particularly carbon finance.…”

Section: Introductionmentioning

confidence: 99%

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Corporate Sustainability in Bangladeshi Banks: Proactive or Reactive Ethical Behavior?

Weber

Chowdury

2020

Sustainability

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The purpose of this study is to analyze the connection between the sustainability performance and financial performance of Bangladeshi banks to explore the impact of the Bangladesh Environmental Risk Management Guideline. We analyzed all 56 scheduled commercial banks that are currently operating in Bangladesh under the guidelines of the Central Bank of Bangladesh. Data for the sample has been collected from publicly available reports such as annual, sustainability, and corporate social responsibility (CSR) reports, disclosed sustainability and financial information on the banks’ websites, including all bank branches, and data published from the Central Bank. Data has been analyzed using panel regression. Our results indicate that higher sustainability performance creates a higher financial performance, and that bigger banks perform better with regard to sustainability than smaller banks. The analysis did not find, however, that higher financial performance influences the sustainability performance of the banks positively. Consequently, this research contributes to the research on legitimacy-driven behavior of Bangladeshi banks. This behavior rather leads to a reactive adoption of sustainability activities instead of proactive behavior.

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Section: Discussionsupporting

confidence: 73%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Corporate Sustainability in Bangladeshi Banks: Proactive or Reactive Ethical Behavior?

Weber

Chowdury

2020

Sustainability

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“…Ghosh (2015) pointed out that there is a strong relationship among the liquidity risk, asset size, and cost efficiency of the banking sector and non-performing loans, which would be affected by social factors [14]. Guan et al (2017) analyzed the relationship between the carbon intensity of loans and non-performing loans according to China's environmental protection strategy, and found that the green credit would enhance the credit risk of banks and promote the non-performing loans [15]. Through the analysis of bank-specific view, it can be seen that the emergence of the non-performing loans problem could be largely affected by the bank management and the size of loans.…”

Section: Non-performing Loansmentioning

confidence: 99%

Impacts of Financial Inclusion on Non-Performing Loans of Commercial Banks: Evidence from China

2018

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Non-performing loans of commercial banks have long hampered the development of the banking sector, and directly reflect the credit risk and asset quality. With the continuous development of the financial industry, the introduction of financial inclusion has greatly eased the shortage of funds, and narrowed the gap between poor and rich. However, whether the promotion of financial inclusion in the financial industry could affect the non-performing loans of commercial banks has not been verified. Therefore, this paper discusses the possible associations between financial inclusion and non-performing loans of commercial banks on the regional level, constructs a panel data model by selecting the data of 31 provinces (including 4 municipalities) in China from 2005 to 2016, and uses the fixed effect model for empirical test. The empirical results (from an overall national sample) reveal a negative impact of the financial inclusion on non-performing loans. Moreover, the development of the banking sector and the regional consumption could enhance the impact of financial inclusion, while government intervention and unemployment could reduce the impact of financial inclusion. From the analysis of the regional sample, when the development of financial inclusion reaches a high level, the lagged financial inclusion promote the non-performing loans of commercial banks; however, when the financial inclusion is underdeveloped, the development of commercial banks act as a disincentive to non-performing loans. Therefore, the local governments should pay more attention to the influences of financial inclusion on the financial industry, in order to maintain the stability of banking asset quality. In addition, the negative impact of financial inclusion on non-performing loans of commercial banks is significant in China central region, while its impacts in China eastern and western regions are not significant. This indicates that the development of the financial industry and economy can hamper the effects of financial inclusion. It is necessary to adjust the financial resource allocation according to the characteristics of different regions in China, so that the financial inclusion can effectively promote the regional financial industry upgrade, improve regional capital flow efficiency, and fundamentally reduce the non-performing loans of commercial banks. According to the sample analysis by time, there is a significant negative impact relationship between inclusive finance and commercial banks’ non-performing loans after the financial crisis, while the impacts before and during the financial crisis are not significant. This demonstrates that the impact of the global financial crisis on China’s regional economy has further enhanced the inefficiency of the inclusive financial system on credit risk, which in turn, helps commercial banks better maintain asset quality stability.

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“…Scholars have also discovered that green loans are less risky than nongreen loans (Cui et al, 2018). In conclusion, implementing green credit can increase bank profits while lowering credit risk (Guan et al, 2017;Yin et al, 2021).…”

Section: Literature Reviewmentioning

confidence: 99%

Can green credit policy promote green total factor productivity? Evidence from China

Zhang

Shen

et al. 2022

Environ Sci Pollut Res

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Green credit, a market-driven environmental policy instrument and an essential component of the green financial system, has piqued academic and policymakers' interest in whether it has successfully improved Chinese green total factor productivity (GTFP). Utilizing Chinese province panel data from 2006 to 2019, this study assesses GTFP using the Slack-Based Model with the Global-Malmquist-Luenberger technique and investigates the influence of green credit on GTFP as well as its mechanism. The findings suggest green credit has a favorable influence on China's GTFP. Green credit can boost GTFP through three mechanisms: upgrading industrial structure, stimulating green innovation, and optimizing energy consumption structures. Furthermore, green credit improves GTFP in eastern regions but has little impact elsewhere; the promotion impact is more effective in financial developed regions than in financial underdeveloped regions. As a result, the Chinese government should encourage regionally differentiated green credit policy implementation.

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The Higher Carbon Intensity of Loans, the Higher Non-Performing Loan Ratio: The Case of China

Cited by 18 publications

References 25 publications

Corporate Sustainability in Bangladeshi Banks: Proactive or Reactive Ethical Behavior?

Corporate Sustainability in Bangladeshi Banks: Proactive or Reactive Ethical Behavior?

Impacts of Financial Inclusion on Non-Performing Loans of Commercial Banks: Evidence from China

Can green credit policy promote green total factor productivity? Evidence from China

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