The Impact of Patient Capital on the Carbon Footprint of Bank Loans: An Analysis of Mediating Effects based on Bank Operational Risk

Jianhong Tao; Junjie Tong

doi:10.54691/ca41bv71

Authors

Jianhong Tao
Junjie Tong

DOI:

https://doi.org/10.54691/ca41bv71

Keywords:

Patient Capital; Commercial Banks; Loan Carbon Footprint; Operational Risk.

Abstract

Patient capital's characteristics-including long-term investment and emphasis on sustainable development-align closely with carbon reduction principles, making it a potent driver for effectively lowering the carbon footprint of bank loans. Using a sample of 38 listed commercial banks in China's A-share market from 2010 to 2022 and employing a dual fixed-effects model, this study empirically examines the intrinsic relationship among patient capital, bank operational risk, and the carbon footprint of bank loans. Findings reveal: (1) Increasing the proportion of patient capital in the total equity of listed commercial banks significantly reduces the carbon footprint of bank loans. (2) Patient capital can lower the carbon footprint of bank loans by reducing bank operational risk. (3) This impact exhibits heterogeneity across bank asset size, ownership structure, and capital adequacy. Consequently, banks should leverage patient capital in a tailored manner to achieve a win-win outcome of green low-carbon transformation and risk prevention. Regulatory authorities should strengthen policy guidance and oversight to promote the role of patient capital in banking for green development.

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