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| Climate Policy Uncertainty and the Green Response of Commercial Banks: Rhetoric versus Reality |
| LI Zhihui, CHANG Xinyu, WEI Bin, ZHANG Ning
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| School of Economics, Nankai University; Postdoctoral Research Station of the Institute of Finance, Chinese Academy of Social Sciences |
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Abstract In recent years, the tension between human economic activities and the degradation of the natural environment has become increasingly pronounced. Balancing economic development with environmental protection has emerged as a critical concern for most economies. To address this, targeted climate policies are implemented to establish a green, low-carbon, and circular economic and social system. Green and low-carbon development are pivotal to achieving high-quality growth. Within this transition, commercial banks, as key participants and intermediaries in the financial market, play an essential role in ensuring the efficient allocation of social resources. Consequently, enhancing banks' green responsiveness is not only crucial in the short term for overcoming green project financing bottlenecks and improving the quality and efficiency of real economy transformation, but also represents a necessary long-term pathway for deepening financial supply-side structural reform and strengthening the financial system's resilience to climate change and its capacity for sustainable development.
In proactive response to climate change and to foster a green and low-carbon transition, China has progressively established a climate governance and green finance policy system guided by its “dual carbon” goals. However, the inherent unpredictability of climate change, combined with numerous uncertainties across various stages of climate policy formulation, has significantly heightened the instability of the policy environment. International academic research has demonstrated that climate risks and policy adjustments are increasingly becoming key factors influencing the decisions of financial institutions, particularly commercial banks. Climate risks can propagate through the financial system via bank-firm credit channels, significantly impacting banks' asset quality, performance, and risk-taking, while also creating spillover effects on monetary policy transmission and the effectiveness of macroprudential policies. Regarding climate policy adjustments, scholars have examined their impact on banks' micro-level performance, including their risk-taking levels, liquidity creation, and behavioral decisions. While existing literature provides a crucial foundation for understanding the link between climate policy and bank behavior, certain limitations remain. On one hand, most studies adopt a passive perspective focused on risk aversion, relatively neglecting the proactive, strategic, and complex nature of bank decision-making. On the other hand, the discussion tends to concentrate on core business activities, with insufficient research dedicated to banks' green information disclosure and communication.
Following this research trajectory, this paper empirically examines the impact of climate policy uncertainty (CPU) on banks' green responsiveness using a sample of A-share listed banks from 2012 to 2023. It fills a gap in the literature by shifting focus from macro-level climate risks towards the transmission of climate policy risks. The study reveals two key findings regarding the “actions” and “words” of banks' green responsiveness. Regarding “actions”, CPU is found to inhibit banks' green credit allocation. As for “words”, this paper constructs a theoretical framework based on the additive mechanism of the cost-benefit effect, following Haans et al. (2016). The empirical tests reveal an inverted U-shaped relationship between CPU and banks' green information disclosure. These conclusions remain consistent across a series of robustness checks. Mechanism analysis indicates that CPU suppresses green credit allocation by intensifying information friction between banks and enterprises and by tightening banks' resource constraints. Conversely, the inverted U-shaped effect of CPU on green disclosure operates through changes in banks' allocation of attention resources to green governance. Drawing on the attention-based view, the study finds that management's trade-off between the marginal benefits and marginal costs of attention allocation forms the micro-level cognitive basis driving their disclosure strategies. Furthermore, the paper constructs an indicator of “words-actions deviation” in green responsiveness, discovering that high levels of CPU tend to make banks' green responsiveness prone to “actions lagging behind words”. Heterogeneity analysis reveals that in banks located in areas affected by natural disasters, those with executives possessing environmental protection backgrounds, and those with higher ESG ratings, the inhibitory effect of CPU on green credit allocation is significantly mitigated, and the inverted U-shaped relationship with green disclosure also becomes insignificant. This research holds significant policy implications for stabilizing expectations and enhancing the effectiveness of bank actions during the climate policy transition period. Based on the findings, corresponding policy recommendations are proposed. The government, regulatory agencies, banks, and firms should collaboratively build a climate finance support system characterized by “stable policy expectations, regulatory incentive compatibility, and positive bank-firm interaction”, guiding financial resources to be precisely channeled into green sectors and injecting lasting momentum into high-quality economic development.
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Received: 24 October 2025
Published: 02 June 2026
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