Work detail

Regulation of green banking

Author: Bc. Simona Ivančová
Year: 2021 - summer
Leaders: prof. PhDr. Petr Teplý Ph.D.
Work type: Bachelors
Language: English
Pages: 57
Awards and prizes:
Abstract: This thesis provides an assessment of potential impacts of the regulation of
green banking proposed by the European Commission. Two types of data and
methodologies are used. The sample consisting of 28 green banks and 63 of
its peers, observed from 2012 to 2018, is analysed via panel regression to estimate the impact of green banking on profitability and volatility of banks.
We use the Within-between estimation which allows the studied dummy variable Green to be estimated. Profitability is measured by Return on Assets
and Return on Equity and to measure volatility we use their 7-year standard
deviations. Aggregated data from the European Central Bank on European
banks asset breakdown by instrument are used for the sensitivity analysis estimating the impact of the proposed regulation on the bank capital. Firstly, we did
not find statistically significant impact of green banking practice on banks
profitability. We found the green banks tend to demonstrate lower volatility
in terms of Return on Equity. Secondly, we estimated that planned regulation of
green banking practice will probably have negligible impact on the banks
capital. However, it might decrease lending to carbon-intensive industries by
commercial banks.


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