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Green finance policies and bank systemic risk: Evidence from listed banks in China

Author

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  • Tian, Chenkai
  • Shen, Xinyan
  • Liu, Yangjingzhuo

Abstract

This study examines the impact of green finance policies on bank systemic risk. The effects of these policies on bank systemic risk are determined by macroeconomic and regulatory factors. Green finance policies significantly reduce systemic risk during economic expansions but increase it during contractions. Loose monetary policies amplify the risk associated with green finance, whereas tight monetary policies mitigate it. Green finance policies are linked to banks’ increased bank risk-taking behavior, which raises systemic risk. Furthermore, we analyze the differential impacts in developed financial markets. Our findings highlight the necessity of policy cooperation in balancing sustainability goals with financial stability.

Suggested Citation

  • Tian, Chenkai & Shen, Xinyan & Liu, Yangjingzhuo, 2025. "Green finance policies and bank systemic risk: Evidence from listed banks in China," Finance Research Letters, Elsevier, vol. 80(C).
    • Handle: RePEc:eee:finlet:v:80:y:2025:i:c:s1544612325006488
    DOI: 10.1016/j.frl.2025.107388
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    References listed on IDEAS

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