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

Yinglin Song ()
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Yinglin Song: Sanya University

A chapter in Proceedings of the 2025 International Conference on Financial Innovation and Marketing Management (FIMM 2025), 2025, pp 392-400 from Springer

Abstract: Abstract As global environmental issues and the contradiction between development and the carrying capacity of resources and the environment become increasingly prominent, the development of green finance has become an inevitable choice for achieving coordinated economic and environmental development. Sustainable finance leverages specialized instruments like eco-friendly loans to drive economic decarbonization. This approach has become an essential strategy for facilitating the shift in national development paradigms and accelerating industrial modernization toward environmentally conscious practices. The sector represents both an innovative financial mechanism and a critical response to pressing global ecological challenges. Green finance extends beyond environmental benefits, significantly influencing commercial banks’ profitability and operational frameworks. This study investigates how green finance influences bank profitability by compiling and evaluating data from 14 Chinese banks from 2014 to 2022. The sample includes the “Big Five” state-owned banks (ICBC, ABC, BoC, CCB, and BoCom) alongside joint-stock commercial banks like China Merchants Bank and SPDB, which examines how green finance initiatives influence the profitability of these banking institutions. Empirical findings reveal a U-shaped link between green finance and bank profitability. While green finance may temporarily reduce bank profits, it enhances long-term financial performance. With these insights, the research presents pertinent suggestions to both the administration and private lenders for fostering eco-friendly financial strategies. This study offers data-driven insights and conceptual backing for sustainable finance transformation.

Keywords: green finance; commercial bank profitability; U-shaped relationship (search for similar items in EconPapers)
Date: 2025
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DOI: 10.2991/978-94-6463-874-5_47

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