Financial policy innovation for social change: a case study of China's green credit policy

Financial policy impacts on a range of social issues such as poverty alleviation, education, pollution control, etc. Making good use of financial policy and applying innovation to existing financial systems can generate positive outcomes for society. This article is to discuss the case of green credit policy in China. This policy was jointly announced in 2007 by financial and environmental regulators. According to this policy, banks were encouraged to give more loans to environmental friendly companies than to others. Such policy has made great progress, and it became a more formal document entitled ‘Green Credit Guideline’ in 2012. This guideline included a comprehensive definition on green credit and specified several requirements at practical levels. Despite the great success, challenges of implementing such policy still remain. First, information about corporate environmental performance is insufficient; second, market incentives for green credit policy are not high enough; third, most banking staff l...