A Probe into the Path of Internalization of Green Development Concept in China's Commercial Banks Credit System

Chen Jie ,Cao Yuee ,Zhao Hualun

doi:10.7176/ppar/9-4-02

Abstract

Since the mid-1990s, China's green credit business has witnessed great progress. Generally speaking, the proportion of green credit balance in total loans, however, is still quite low. This paper believes that on top of some objective reasons that the green credit business started late and the industrial structure is less strong, the subjective awareness of green development and environmental responsibility of banking financial institutions is weak, systematic green credit policy is deficient and internal control mechanism is imperfect, which are the main reasons for constraining the development of green credit business. Therefore, the current paper explores the feasible path to promote the rapid development of green credit business from the perspective of the internalization of green development concept in the bank credit system. It mainly consists of three parts: firstly, it expounds the concept of green credit from the perspective of the conception and definition of internalized green credit development; secondly, it analyzes the status quo of China's green credit development and its functional reasons; finally, with the three paths of proposing a green credit policy, establishing a green development concept and strengthening internal mechanisms of management and control, we integrate the green development concept into the bank's green credit system for the purpose of promoting the development of green credit business in banking financial institutions. Keywords: green credit, credit policy, path analysis DOI : 10.7176/PPAR/9-4-02 Publication date : April 30 th 2019

Highlights

In 1995, China promulgated the "Notice on Issues Concerning the Implementation of Credit Policies and Strengthening Environmental Protection Work", which first proposed that financial institutions should consider the environmental impact of the production activities of loan companies
In view of the important role of green credit in promoting the transformation and upgrading of China's economic structure and the construction of a two-type society, this paper will explore the feasible path to promote the rapid development of green credit business from the perspective of the conception of internalization of green credit in the banking credit system
Taking all these into consideration, the green credit discussed in this paper refers to a series of activities: financial banking institutions classify production units or service providers within the framework of national industry, energy conservation, environmental protection, and green credit policies, and conduct credit business according to the results of green category and comprehensive evaluation of credit rating

Summary

Introduction

In 1995, China promulgated the "Notice on Issues Concerning the Implementation of Credit Policies and Strengthening Environmental Protection Work", which first proposed that financial institutions should consider the environmental impact of the production activities of loan companies. This paper believes that the green credit business is banks' autonomous behavior, which reflects the external regulatory requirements but more importantly, banks' own intentions and practices Taking all these into consideration, the green credit discussed in this paper refers to a series of activities: financial banking institutions classify production units or service providers within the framework of national industry, energy conservation, environmental protection, and green credit policies, and conduct credit business according to the results of green category and comprehensive evaluation of credit rating. Status Quo and Causes of China's Green Credit Development Since the promulgation of the "Notice on Implementing Credit Policies and Strengthening Environmental Protection Work" in 1995, China has successively issued a series of policy documents related to green credit It has clarified the credit control requirements for high-pollution, high-energy-consuming and high-emission industries, encouraged the development of green, low-carbon, and circular economy credit businesses, and pointed out the development direction for the Chinese banks' green credit. Table: Total green credit and loan figures of the five major banks in 2014-2016 Unit: 100 million yuan

Bank of Communications

Findings

Conclusion