{"title":"Sustainable Finance & China's Green Credit Reforms: A Test Case for Bank Monitoring of Environmental Risk","authors":"Virginia E. Harper Ho","doi":"10.2139/ssrn.3124304","DOIUrl":null,"url":null,"abstract":"As financial institutions and policymakers worldwide are considering how to integrate sustainability considerations throughout financial systems, a critical question is whether banks can effectively assess and monitor borrowers’ environmental credit risk. China’s green credit reforms, part of sweeping “green finance” policies adopted by the Chinese government over the past decade, require banks to do exactly that. China’s green credit reforms offer an opportunity to test current theories of the role of creditors in corporate governance and the potential role of banks in driving sustainable finance across global capital markets. <br><br>This study uses data from the 21 Chinese banks that are at the forefront of China’s green finance initiatives, as well as insights from fieldwork conducted in 2016 and 2017, to examine banks’ ability to monitor and price environmental credit risk. This investigation shows that leading Chinese banks are strengthening their ability to integrate environmental criteria into credit risk assessment but that key barriers to efficient pricing and monitoring of environmental credit risk remain. This article concludes with lessons from the Chinese context for sustainable finance reform elsewhere.","PeriodicalId":45714,"journal":{"name":"CORNELL INTERNATIONAL LAW JOURNAL","volume":null,"pages":null},"PeriodicalIF":0.2000,"publicationDate":"2018-02-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"19","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"CORNELL INTERNATIONAL LAW JOURNAL","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.2139/ssrn.3124304","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q4","JCRName":"INTERNATIONAL RELATIONS","Score":null,"Total":0}
引用次数: 19
Abstract
As financial institutions and policymakers worldwide are considering how to integrate sustainability considerations throughout financial systems, a critical question is whether banks can effectively assess and monitor borrowers’ environmental credit risk. China’s green credit reforms, part of sweeping “green finance” policies adopted by the Chinese government over the past decade, require banks to do exactly that. China’s green credit reforms offer an opportunity to test current theories of the role of creditors in corporate governance and the potential role of banks in driving sustainable finance across global capital markets.
This study uses data from the 21 Chinese banks that are at the forefront of China’s green finance initiatives, as well as insights from fieldwork conducted in 2016 and 2017, to examine banks’ ability to monitor and price environmental credit risk. This investigation shows that leading Chinese banks are strengthening their ability to integrate environmental criteria into credit risk assessment but that key barriers to efficient pricing and monitoring of environmental credit risk remain. This article concludes with lessons from the Chinese context for sustainable finance reform elsewhere.
期刊介绍:
Founded in 1967, the Cornell International Law Journal is one of the oldest and most prominent international law journals in the country. Three times a year, the Journal publishes scholarship that reflects the sweeping changes that are taking place in public and private international law. Two of the issues feature articles by legal scholars, practitioners, and participants in international politics as well as student-written notes. The third issue is dedicated to publishing papers generated by the Journal"s annual Symposium, held every spring in Ithaca, New York.