Contents

The Central bank roles to drive sustainable banking in Thailand

focus on green loan policy

PRUKPRAKARN, Tanaracht

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Abstract

The world environment has been damaged by human activities and natural disasters. This is further exacerbated by climate change. The concept of sustainable banking is one instrument to deal with climate change in the banking sector. Governments and private companies are applying these goals in their policy and business strategies. Because Financial Institutions are critical players to support and provide sufficient funding for the project. The linkage between climate change, the banking system, and central banks has become closer. Central banks are gaining a critical role in driving their sustainability in the financial system. However, the scope of sustainable banking and bank’s businesses is enormous. This study focuses on banks’ green loan policies.

The study will analyze the factors which affect the green loan policies and enhance the resilience and sustainability of the environment and the banking sector. From the research question “What determines the green loan policy from a bank perspective”, increasing business opportunities, better risk management, and enhancing their reputation among stakeholders are 3 factors that will incentivize banks to integrate green loan policy. The data are divided into 4 parts - bank performance analysis, stock price response, consumer survey, and bank employee survey. It looks at the effect of green policy on business opportunities and risk management as well as the effect between financial performance and sustainability performance. The bank’s reputation from the investors’ point of view is measured through the effect of environmental events/news and environment disclosure score on the bank’s stock price. Customers’ attitudes on the reputation of green loan granting banks and linkage between obstacles and effective policy in employees’ view are examined. To examine the linkage between green loan and business opportunities, the financial data, sustainability score, environment events/news, and stock prices of 5 significant banks in Thailand from 2015 – 2019 was used. The data is then loaded into the SPSS software for analysis and hypothesis testing.

This study aims to explore how are green loans increase the financial performance of Thai banks, and but does not confirm that green loans lead to better credit risk management. Environmental factors also have an impact on banks’ reputations. Environmental disclosure score affects the stock price which represents investors' perception. The customers’ attitude influences the reputation of green loan-granting banks. And the right obstacle defining leads the effectiveness of the central bank policy support. The Central bank should launch the policy to enhance interest in green lending. The green loan policies should have an impact on the bank’s financial performance, risk management, and/or reputation directly or indirectly to motivate banks to grant green loans. The voluntary policy will be boosted through non-financial incentives and financial incentive policies. However, the central bank should define the root cause of obstacles in designing practical policies. Regulation is not the only key to drive green lending. The banks’ reputation from the perspectives of both customers and investors confirms the concept that they are interested in green banking concept. The Central bank’s event or reward system on environmental concerns such as green banking reward will put pressure on the sector and increase awareness of green banking. It will also signal that the central bank is focusing on a new target.

As green banking is a new concept in Thailand, the number of studies and data on the green loan is remarkably limited. The conclusion of the impact of the green loan on those motivating factors may early to decide the conclusion. Recommendations for improving the research are provided in the last part of this research.

Advisors
Sohn, Wook
Department
KDI School, Master of Development Policy
Issue Date
2021
Publisher
KDI School
Description
Thesis(Master) -- KDI School: Master of Development Policy, 2021
Keywords
Banks and banking--Thailand; Loans--Thailand
Contents
Chapter 1 Introduction

Chapter 2 Literature Review

Chapter 3 Role and Challenging of BOT on green loan policy

Chapter 4 Research Methodology

Chapter 5 Data Collection

Chapter 6 Research Result from Quantitative data

Chapter 7 Research Result from Questionnaire

Chapter 8 Discussion and Policy Recommendation
Pages
121 p
URI
https://archives.kdischool.ac.kr/handle/11125/42260
Type
Thesis
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