Is China’s banking industry embracing sustainable investment?

ABSTRACT

Built upon an analysis of 2858 publicly listed companies in China, we found that although polluting companies historically received more loans from banks than nonpolluting companies, this trend has recently changed in China. Polluting companies receive fewer loans from banks and the borrowing cost increases over time. This suggests that the Chinese banking industry is becoming more environmentally responsible in its loan decision-making.

KEYWORDS:

• Sustainable investment
• banking industry
• China
• green credit policy

JEL CLASSIFICATION:

• G10
• Q56
• Q58

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This work was supported by the National Natural Science Foundation of China[grant numbers: 71322305 71632007 71692041 71421002].