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Environmental policy stringency and bank risks: Does green economy matter?

Author

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  • Lee, Chien-Chiang
  • Wang, Chih-Wei
  • Hong, Pei-Hsuan
  • Lin, Weizheng

Abstract

This study examines the relationship between environmental policy stringency (EPS) and bank risks, with an additional focus on exploring the influence of EPS on bank risks through the mechanism of green economy. The primary result of our study reveals that EPS can increase bank risks. Additionally, we find that EPS contributes to the mitigation of bank risks through the channel of green economy. Moreover, we identify that EPS can more prominently increase bank risks in both Asia and Europe and during non-crisis periods. Furthermore, for banks with greater capital, lower leverage, and in developed countries, the favorable influence of EPS on bank risks becomes increasingly noteworthy.

Suggested Citation

  • Lee, Chien-Chiang & Wang, Chih-Wei & Hong, Pei-Hsuan & Lin, Weizheng, 2024. "Environmental policy stringency and bank risks: Does green economy matter?," International Review of Financial Analysis, Elsevier, vol. 91(C).
    • Handle: RePEc:eee:finana:v:91:y:2024:i:c:s1057521923005562
    DOI: 10.1016/j.irfa.2023.103040
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    More about this item

    Keywords

    Environmental policy stringency; Bank risks; Green economy;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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