The Impact of Green Finance on Profitability of Commercial Banks: An Empirical Analysis from Chinese Commercial Banks

Abstract

With the increasingly serious problem of environmental pollution, the development of economy must adhere to the road of sustainable development of green economy, and commercial banks have played a vital role in promoting economic development. This paper aims to analyze and evaluate the profitability of commercial banks in the context of green finance by analyzing the main business of commercial banks in the field of green finance and effectively assess the potential risks, and then improve the profitability of commercial banks. According to the current situation of commercial banks, some suggestions on how to improve and become a high-quality and sustainable new commercial bank project are provided. In this paper, data from 2010-2022 are selected as samples to analyze the impact of green finance development on bank profitability through Hausman test, the reliability is verified by robustness analysis. The proportion of green credit has a significant negative impact on bank profitability. Listed commercial banks are sacrificing their own profits to promote the development of green finance. Compared with the previous research data, it is more complete and provides strong empirical support for green finance policy making and bank strategic planning. The conclusion of this paper puts forward constructive suggestions for the future development of green finance in commercial banks.