Publication Type

PhD Dissertation

Version

publishedVersion

Publication Date

4-2026

Abstract

As China’s “dual carbon” strategy advances, green credit has increasinglybecome a crucial financial instrument driving the green transition of China’s industrial structure. From a dual perspective of asset quality and ESGperformance, this paper systematically examines the determinants andconsequences of green credit practices among commercial banks. Employing a multiple-method approach that combines comparative case study, in-depthinterview, and large-sample empirical analysis, this study aims to address twocore questions: First, what are the key factors driving commercial banks toprovide green credit, and what is the logic behind their differentiated decision- making? Second, how does green credit affect banks’ financial and non-financial performance? This paper makes four main contributions: it adopts a supply-side perspective on green credit; it employs a research method combining case studyand empirical analysis; it accounts for heterogeneity across banks; and it constructs a theoretical and empirical analytical framework centered on the dual pillars of financial and non-financial performance.

The case study selects six banks with significant differences in green credit practices and compares their implementation approaches and performance. The findings indicate that state-owned banks and national joint-stock banks generallyoutperform regional urban commercial banks and rural commercial banks in greencredit practices. Based on text analysis and financial results, this paper further addresses the timing of banks’ adoption of green credit and the resultingperformance disparities. Specifically, “bank types and characteristics”, “executives’ understanding and ESG willingness”, and “resource endowments and constraints” are identified as key drivers for early adoption, while “greentransformation strategy and culture”, “governance system and institutional safeguards”, and “green literacy and dynamic capabilities” explain why certainbanks achieve better performance in green finance, asset quality, and ESG.

The empirical analysis examines whether green credit can improve bankasset quality and ESG performance across a broad sample. Given the heterogeneity among banks, green credit may have a positive impact on some banks, while its impact might be insignificant or even negative on others. Accordingly, this paper proposes a theoretical hypothesis that, in equilibrium, the impact of green credit on banks’ non-performing loan (NPL) ratios is uncertain. Using panel data of 42 A-share listed banks from 2014 to 2023, while adopting a multivariate regression analysis, this study empirically tests the impact of greencredit on banks’ NPL ratios (financial performance) and ESG scores (nonfinancial performance). The results reveal two main findings: First, the consequences of green credit expansion are heterogeneous, and the resultingincrease in NPL ratios primarily stems from the negative impact on regional banks (i.e. urban and rural commercial banks); meanwhile, green credit improves the asset quality of state-owned banks and its impact on joint-stock banks exhibits a positive trend. Second, overall, green credit expansion leads to an increase in the total ESG score, which is mainly driven by its positive impact on the environmental (E) scores of state-owned banks; however, its impact on regional banks remains consistently negative, suggesting that green transformationrequires corresponding infrastructure and capability support; otherwise, it may be counterproductive.

This study concludes that the financial and non-financial impacts of greencredit vary across different types of commercial banks. The impact of green credit on financial and non-financial performance depends on banks’ forward-lookingstrategic transformation, complementary governance mechanisms, andcontinuously enhanced green capabilities. Based on this, this paper discusses the implications for banks and policymakers. This study provides theoretical support and empirical reference for commercial banks to advance their greentransformation, and also offers insights for the government in optimizing greenfinance regulation and policy making.

Keywords

Determinants of Green Credit, Consequences of Green Credit, Asset Quality, ESG Performance, Endogenous Drivers

Degree Awarded

Doctor of Business Administration (Accounting and Finance)

Discipline

Finance and Financial Management

Supervisor(s)

CHENG, Qiang

First Page

1

Last Page

190

Publisher

Singapore Management University

City or Country

Singapore

Copyright Owner and License

Author

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