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

Chien Chiang Lee; Chih Wei Wang; Pei Hsuan Hong; Weizheng Lin

doi:10.1016/j.irfa.2023.103040

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

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

Department of Finance

Research output: Contribution to journal › Article › peer-review

21 Scopus citations

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.

Original language	English
Article number	103040
Journal	International Review of Financial Analysis
Volume	91
DOIs	https://doi.org/10.1016/j.irfa.2023.103040
State	Published - Jan 2024

Keywords

Bank risks
Environmental policy stringency
Green economy

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10.1016/j.irfa.2023.103040

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title = "Environmental policy stringency and bank risks: Does green economy matter?",

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.",

keywords = "Bank risks, Environmental policy stringency, Green economy",

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AU - Lee, Chien Chiang

AU - Wang, Chih Wei

AU - Hong, Pei Hsuan

AU - Lin, Weizheng

PY - 2024/1

Y1 - 2024/1

N2 - 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.

AB - 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.

KW - Bank risks

KW - Environmental policy stringency

KW - Green economy

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VL - 91

JO - International Review of Financial Analysis

JF - International Review of Financial Analysis

M1 - 103040

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

Abstract

Keywords

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