Green Banking Regulation and Cross-Border Lending

Le Thanh Ha and Thang Doan

Chapter 8 in Fintech and Green Investment:Transforming Challenges into Opportunities, 2024, pp 215-254 from World Scientific Publishing Co. Pte. Ltd.

Abstract: This chapter uncovers the effects of green banking regulation (GBR) on cross-border lending using panel data of 2,814 country pairs from 1995 to 2019. We label banking regulations as de jure and de facto ones. The former captures whether a central bank has explicit sustainability objectives or supports the government’s policies to pursue sustainability goals. The latter reflects whether a central bank takes on green activities or not. We use panel data of 2,814 country pairs from 1995 to 2019. The empirical results show that while de jure regulation acts as a brake, de facto regulation fosters cross-border banking flows (CBFs). When both genres of regulation are matched, the joint effects are positive. GBR mitigates the detrimental effects of environmental risks. These results are robust for alternative measures of green finance regulation and when we take the endogeneity into account. Our findings suggest important policy implications that central banks should engage in green banking activities to spur CBFs.

Keywords: Fintech; New Institutional Economics; Climate Change; Commons; Financialization; Distributed Ledger Technology; Neoliberalism; Trilemma; Securitisation; Blockchain; Sustainability; Innovation; Circular Economy; Implementation; Governance; Challenge; Security; Decentralization; Digital Currencies; Circular Economy; Environmental Accountancy; Food Loss; Food Security; Food Waste; Industrial Symbiosis; Material Flow Analysis; Waste Management; China; Green Growth; Digital Finance; Big Four; Coal; Sustainable Development; Bitcoin Mining; Proof-of-Work (PoW); Energy Consumption; Carbon; Footprint; Market Value; Investor Attention; Google Search Volume; Causality; Cardano Coin; Behavioural Finance; Green Cryptocurrencies; Proof-of-Stake (PoS); Energy Efficiency; Green Finance; DeFi; CeFi; Banking System; Financial System; Bank-based Systems; Market-based Systems; SMEs; Corporate Ownership; Cross-border Banking Flows; De Jure; De Facto Regulations; Green Banking; Environmental Risks; Green Finance Regulation; Green Finance Policies; Gender Equality; Financial Inclusion; Women; Climate Change; Environment; Inequality; Poverty; Central Bank Digital Currency (CBDC); Common Prosperity; Sustainable Democracy; Economic Inequality Elimination; COVID-19; Economic Perspectives; Interdisciplinary Study; Youth Banking; Unbanked; Underbanked; Neobank; Accessibility; Practicability; Financial Inclusion; Digital Technologies; Energy Sector; Financial Issues; Supply Chain Financing (search for similar items in EconPapers)
JEL-codes: G2 Q5 (search for similar items in EconPapers)
Date: 2024
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