The impact of the Equator Principles on carbon financial markets: A case study based on China's green credit data
Empirical research was conducted on green credit asset securitized products issued by commercial banks in 2014 and 2016. By establishing an Autoregression moving average (ARMA) model, the paper analyzed the relationship between the Industrial Bank's implementation of green credit asset securiti...
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| Format: | Article |
| Language: | English |
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Elsevier
2022-11-01
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| Series: | Energy Strategy Reviews |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S2211467X22001936 |
| _version_ | 1811201829018533888 |
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| author | Shuai Chen Keqiang Wang Hongmei Liu |
| author_facet | Shuai Chen Keqiang Wang Hongmei Liu |
| author_sort | Shuai Chen |
| collection | DOAJ |
| description | Empirical research was conducted on green credit asset securitized products issued by commercial banks in 2014 and 2016. By establishing an Autoregression moving average (ARMA) model, the paper analyzed the relationship between the Industrial Bank's implementation of green credit asset securitization and its capital adequacy ratio. The results showed that the implementation of green credit asset securitization improved the bank's capital adequacy ratio and reduced its nonperforming loan ratio. Then, an empirical study based on carbon finance market operating mechanisms was conducted on Chinese commercial banks that have adopted the “Equator Principles” (EPs). An event study method was used to observe the impact of adoption on the banks. The results indicate that, after the industrial bank adopted the “Equator Principles '', its asset scale increased from 2006 to 2009, whereas its nonperforming loan ratio decreased from 2006 to 2011. After commercial banks adopted the “Equator Principles '', the cumulative average excess return reached its maximum on the eighth day after the event and was significantly higher than the industry average. It is important to promote the awareness of banks of their close links with environmental protection and encourage them to adopt the “Equator Principles” to significantly improve their risk management awareness, business processes, technical systems, and performance in the carbon financial market. By adopting the “Equator Principles”, developing financial derivatives for carbon trading, and promoting the development of structured products for carbon trading, commercial banks can contribute to environmental protection while gaining commercial benefits. |
| first_indexed | 2024-04-12T02:27:31Z |
| format | Article |
| id | doaj.art-285dc3c115c343898d9cb63a219c7866 |
| institution | Directory Open Access Journal |
| issn | 2211-467X |
| language | English |
| last_indexed | 2024-04-12T02:27:31Z |
| publishDate | 2022-11-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Energy Strategy Reviews |
| spelling | doaj.art-285dc3c115c343898d9cb63a219c78662022-12-22T03:51:54ZengElsevierEnergy Strategy Reviews2211-467X2022-11-0144100999The impact of the Equator Principles on carbon financial markets: A case study based on China's green credit dataShuai Chen0Keqiang Wang1Hongmei Liu2Business School, University of Shanghai for Science and Technology, 334 Jungong Road, Yangpu District, Shanghai, China; Corresponding author.School of Public Economics and Administration, Shanghai University of Finance and Economics, 777 Guoding Road, Yangpu District, Shanghai, ChinaSchool of Finance and Business, Shanghai Normal University, 100 Guilin Road, Xuhui District, Shanghai, ChinaEmpirical research was conducted on green credit asset securitized products issued by commercial banks in 2014 and 2016. By establishing an Autoregression moving average (ARMA) model, the paper analyzed the relationship between the Industrial Bank's implementation of green credit asset securitization and its capital adequacy ratio. The results showed that the implementation of green credit asset securitization improved the bank's capital adequacy ratio and reduced its nonperforming loan ratio. Then, an empirical study based on carbon finance market operating mechanisms was conducted on Chinese commercial banks that have adopted the “Equator Principles” (EPs). An event study method was used to observe the impact of adoption on the banks. The results indicate that, after the industrial bank adopted the “Equator Principles '', its asset scale increased from 2006 to 2009, whereas its nonperforming loan ratio decreased from 2006 to 2011. After commercial banks adopted the “Equator Principles '', the cumulative average excess return reached its maximum on the eighth day after the event and was significantly higher than the industry average. It is important to promote the awareness of banks of their close links with environmental protection and encourage them to adopt the “Equator Principles” to significantly improve their risk management awareness, business processes, technical systems, and performance in the carbon financial market. By adopting the “Equator Principles”, developing financial derivatives for carbon trading, and promoting the development of structured products for carbon trading, commercial banks can contribute to environmental protection while gaining commercial benefits.http://www.sciencedirect.com/science/article/pii/S2211467X22001936Equator principlesCarbon financeGreen creditARIMA modelEvent study method |
| spellingShingle | Shuai Chen Keqiang Wang Hongmei Liu The impact of the Equator Principles on carbon financial markets: A case study based on China's green credit data Energy Strategy Reviews Equator principles Carbon finance Green credit ARIMA model Event study method |
| title | The impact of the Equator Principles on carbon financial markets: A case study based on China's green credit data |
| title_full | The impact of the Equator Principles on carbon financial markets: A case study based on China's green credit data |
| title_fullStr | The impact of the Equator Principles on carbon financial markets: A case study based on China's green credit data |
| title_full_unstemmed | The impact of the Equator Principles on carbon financial markets: A case study based on China's green credit data |
| title_short | The impact of the Equator Principles on carbon financial markets: A case study based on China's green credit data |
| title_sort | impact of the equator principles on carbon financial markets a case study based on china s green credit data |
| topic | Equator principles Carbon finance Green credit ARIMA model Event study method |
| url | http://www.sciencedirect.com/science/article/pii/S2211467X22001936 |
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