Greening monetary policy: evidence from the People’s Bank of China

Macaire, Camille; Naef, Alain

doi:10.1080/14693062.2021.2013153

Cited by 21 publications

(12 citation statements)

References 26 publications

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“…It is the first step that needs to be taken in order to formulate an environmental strategy. When developing an environmental strategy for the financial institution, this is the first step that needs to be taken, and it absolutely must be taken (Macaire, 2022). For this approach to work, it is essential to consider the bank's structures and facilities and how it lends money.…”

Section: Policy Making and Administrative Structuresmentioning

confidence: 99%

The Role of the People's Bank of China and Financial Supervisory Authorities for Greening China's Financial System

PIERRE¹,

Diakite²,

Tonguino³

2022

IJEF

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Climate change has become a significant threat to global economies in recent years. The idea that governments, banks, and regulators should work together to combat climate change and promote sustainable financing is gaining traction. The world’s central banks and financial regulators must take action on climate change and support sustainable financing. For example, consider the proliferation of regulatory bodies like the Sustainable Banking Network and central banks. The literature review is descriptive and relies on secondary sources. The report covers the first four quarters of 2021 and summarizes the monetary authority’s policy operations (goals and achievements). This study includes all scheduled banks and non-banking financial institutions in China in 2021, both public and private, due to their roles in green and sustainable finance. We spoke with four seasoned market analysts and four active and retired government officials and policymakers from central banks and financial supervisory authorities. While China’s economic development is undoubtedly threatened by climate change, the country has little choice but to continue to rely on its time-tested approaches to creating riches. The country cannot progress otherwise. Good news: The People’s Bank of China is making eco-friendly banking the norm in China’s financial sector.

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Section: Policy Making and Administrative Structuresmentioning

confidence: 99%

The Role of the People's Bank of China and Financial Supervisory Authorities for Greening China's Financial System

PIERRE¹,

Diakite²,

Tonguino³

2022

IJEF

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“…Second, our study enriches the literature on the consequences of green financial policy by revealing the positive impact of GFP, an integrated green financial policy on corporate ESG performance. A large body of literature mainly focuses on one specific financial instrument, such as green credit (see e.g., Gao & Liu, 2023; Sun et al, 2019; Tan et al, 2022; Zhang et al, 2021; Zhou et al, 2022), green bonds (see e.g., Flammer, 2020; Lee et al, 2023; Macaire & Naef, 2023; Saravade et al, 2023; Zheng et al, 2023) and carbon finance (see e.g., Cao et al, 2021; Fan et al, 2016; Li et al, 2018). However, scholars have not yet reached a unified consensus on the effectiveness of green financial policy.…”

Section: Introductionmentioning

confidence: 99%

Striving for sustainable development: Green financial policy, institutional investors, and corporate ESG performance

Lei,

2023

Corp Soc Responsibility Env

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Environmental, social, and governance (ESG) practices play an increasingly important role in achieving sustainable development goals. Drawing on institutional theory, this paper empirically explores whether and how green financial policy affects corporate ESG performance. Taking China's pilot policy for green finance reform and innovation (GFP) as a quasi‐natural experiment, we employ the difference‐in‐differences model to investigate the causal relationship between green financial policy and corporate ESG performance. We find that the GFP significantly improves corporate ESG performance. The results are robust to a series of checks such as parallel trend examination, placebo test, mitigation of omitted variable bias, alternative variables, and the exclusion of contemporaneous policies. The heterogeneity analysis shows that the positive impact of GFP on corporate ESG performance is more pronounced for firms with tighter financial constraints, higher agency costs, and more external pressures. On this basis, we further document that the positive impact of GFP on corporate ESG performance is more pronounced for investee firms with more institutional ownership. The above findings indicate that the formal institution of government‐led green financial policy can positively affect corporate ESG performance, and market participants‐institutional investors help to strengthen this policy effect. Overall, our study sheds light on the significant role of green financial policy in promoting corporate sustainability.

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“…One of the most important limitations of this dissertation is that the central banks that I have to better understand the different tools and policy implications of green financing (Dikau & Volz, 2021b;Macaire & Naef, 2022), and to compare these different approaches (Larsen, 2022).…”

Section: Scope Of the Research And Limitationsmentioning

confidence: 99%

“…As Blyth and Matthijs (2017) Thirdly, future research should consider a much broader range of central banks, including central banks in developing countries, and examine whether there are lessons to be learned from those central banks that have taken a more activist approach in steering credit towards green industries. Some scholars have started this work (Dikau & Volz, 2021b;Larsen, 2022;Macaire & Naef, 2022), but applying the micro-based perspective from this dissertation to a broader…”

Section: Future Researchmentioning

confidence: 99%

“…Also, the People's Bank of Chine (PBoC) has been active in promoting a range of different tools, starting with green window guidance as early as 2007, with the goal of actively discouraging lending to carbon-intensive and polluting industries. Since 2018 the PBoC has actively supported the spread of green bonds by accepting them as eligible collateral(Dikau & Volz, 2021b;Macaire & Naef, 2022). In many ways, the PBoC can be considered a policy pioneer in the field of sustainable finance(Larsen, 2022).…”

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Managing Climate Change Like a Central Banker: The Political Economy of Greening the Monetary Technocracy

Quorning¹

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It is becoming increasingly clear that if we want to live up to the Paris Agreement and meet the 1.5°C commitment, our societies and economies need to undergo systemic changes at an unprecedented scale. All sectors in the economy will be affected and climate change will therefore likely impact financial and price stability. This realization has led central banks to engage with climate-related issues, leaving central bankers in an unprecedented situation: working with a policy domain outside their immediate knowledge remits. Climate change has become a mainstream issue in central banks, and it is against this background that I seek to understand how central bankers have approached the work with climate change and the extent to which central banks have been repurposed as they have set out to deal with the greatest challenge of our time: the climate crisis. The dissertation draws on insights from International Political Economy, where the dominant approach has been to view central banking from institutional, structural, or ideational perspectives. Here I utilize a micro-level analytical approach constructed around three factors: practices, expertise, and legibility. To understand how central bankers have worked with climate change, I examine the practices they have incorporated, with a focus on climate stress testing and modeling of climate-related risks. I also discuss the types of expertise deployed as I seek to understand how central bankers, trained mainly as economists, work in an entirely new policy domain such as climate change. Finally, I set out to analyze how central bankers have made climate change legible by turning climate change into a risk issue; for central bankers, climate change becomes a risk-based issue, similar to other routine economic problems. I argue central bankers have approached climate change like any other task. In treating climate change as a risk issue, central bankers have been able to work with climate change using their existing expertise and adapting their modeling frameworks to deal with climate-related risks, like any other financial risk. Thus, even though climate change represents a new policy domain, central bankers have maintained the status quo, and subsumed climate change under their current modus operandi. The necessary fundamental changes to the conduct of central banking in the age of anthropogenic climate change remain absent. Despite the urgency of the climate crisis, it is business as usual for the central banks.

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Greening monetary policy: evidence from the People’s Bank of China

Cited by 21 publications

References 26 publications

The Role of the People's Bank of China and Financial Supervisory Authorities for Greening China's Financial System

The Role of the People's Bank of China and Financial Supervisory Authorities for Greening China's Financial System

Striving for sustainable development: Green financial policy, institutional investors, and corporate ESG performance

Managing Climate Change Like a Central Banker: The Political Economy of Greening the Monetary Technocracy

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Greening monetary policy: evidence from the People’s Bank of China

Cited by 21 publications

References 26 publications

The Role of the People&#39;s Bank of China and Financial Supervisory Authorities for Greening China&#39;s Financial System

The Role of the People&#39;s Bank of China and Financial Supervisory Authorities for Greening China&#39;s Financial System

Striving for sustainable development: Green financial policy, institutional investors, and corporate ESG performance

Managing Climate Change Like a Central Banker: The Political Economy of Greening the Monetary Technocracy

Contact Info

Product

Resources

About

The Role of the People's Bank of China and Financial Supervisory Authorities for Greening China's Financial System

The Role of the People's Bank of China and Financial Supervisory Authorities for Greening China's Financial System