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Green credit, monetary policy, and bank risk-taking

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  • Huang, Fei
  • Zhu, Huiming
  • Wu, Saijun

Abstract

This study examines the impact of green credit on the risk-taking behavior of commercial banks, utilizing panel data from 77 banks with diverse ownership structures over the period from 2012 to 2022. The findings indicate that green credit helps mitigate the level of risk undertaken by banks. Moreover, a loose monetary policy fosters the expansion of green credit businesses, exerting a positive moderating effect on bank risk-taking, whereas a tight monetary policy has a negative moderating effect. Additionally, green credit influences bank risk-taking through a profitability effect, significantly boosting commercial banks’ interest income and enhancing their profit structure.

Suggested Citation

  • Huang, Fei & Zhu, Huiming & Wu, Saijun, 2025. "Green credit, monetary policy, and bank risk-taking," Finance Research Letters, Elsevier, vol. 79(C).
    • Handle: RePEc:eee:finlet:v:79:y:2025:i:c:s1544612325005525
    DOI: 10.1016/j.frl.2025.107289
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    References listed on IDEAS

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    1. Sharma, Vikas & Rupeika-Apoga, Ramona, 2026. "Leveraging structural and behavioral models to promote green consumer credit practices in non-banking financial companies," Technology in Society, Elsevier, vol. 84(C).
    2. Lucchetta, Marcella, 2025. "Monetary trade-offs: stability vs. renewables," Economics Letters, Elsevier, vol. 257(C).
    3. Li, Yukun & Deng, Mujun & Cui, Yuqing & Pan, Jing, 2025. "Does monetary policy impact bank risk-taking? An empirical study based on the data of 119 commercial banks in China," Finance Research Letters, Elsevier, vol. 81(C).

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