Green credit, monetary policy, and bank risk-taking

Fei Huang, Huiming Zhu and Saijun Wu

Finance Research Letters, 2025, vol. 79, issue C

Abstract: This study examines the impact of green credit on the risk-taking behavior of commercial banks, utilizing panel data from 77 banks with diverse ownership structures over the period from 2012 to 2022. The findings indicate that green credit helps mitigate the level of risk undertaken by banks. Moreover, a loose monetary policy fosters the expansion of green credit businesses, exerting a positive moderating effect on bank risk-taking, whereas a tight monetary policy has a negative moderating effect. Additionally, green credit influences bank risk-taking through a profitability effect, significantly boosting commercial banks’ interest income and enhancing their profit structure.

Keywords: Green credit; Monetary policy; Risk-taking (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:79:y:2025:i:c:s1544612325005525

DOI: 10.1016/j.frl.2025.107289

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