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Understanding the External Pressure and Behavior of Commercial Banks’ Environmental Risk Management: An Empirical Study Undertaken in the Yangtze River Delta of China

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Abstract

The present study employed a quantitative survey to ascertain whether the external pressure of environmental risk management (ERM) on commercial banks was a contributing factor to their ERM behavior. Data was obtained using questionnaires from 204 branches of commercial banks located in the Yangtze River Delta of China. The relationship between external pressure and behavior was tested using a linear structural relations model through path analysis. The results revealed that external pressure of ERM was significantly and positively related to the behavior and that pressure from governmental regulations was the most important contributing factor in the passive feedback behavior and preventive behavior of commercial banks. The pressure from markets was the most important contributing factor in banks’ active participation behavior; the pressure from community and NGOs was the most important contributing factor in their enthusiastic behavior.

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Notes

  1. In the early 1990s, the Agricultural Bank of China lent a considerable amount of money to small and medium-sized enterprises (SMEs). However, pollution caused by SMEs became a very serious problem and led to critical degradation of the environment. Consequently the government forced closure on many SMEs. The Agricultural Bank of China suffered considerable losses as a result.

  2. For example, in German-speaking markets from 1994 to 1999, funds invested according to environmental criteria grew by 25 %; in China from 2004 to 2008, environmental funds grew by 135 % (China Invest, 2010-1-14 10:46:10. http://www.epi88.com/master/News_View.asp?NewsID=11400).

  3. Coefficient alpha (or alpha coefficient) is one of the important statistics in research involving test construction and use. Interested readers can refer to Cronbach (1951) for a detailed analysis on it.

  4. The World Bank; International Finance Corporation; European Bank for Reconstruction and Development; Asian Development Bank; HSBC; Barclays; Lloyds TSB; National Westminster Bank; Citibank.

  5. Do you think the optional facet is important? (a five-point Likert scale: one = least important; five = most important).

  6. Jiangsu is a Chinese province located along the east coast. Jiangsu has a coastline of over 1000 km along the Yellow Sea, and the Yangtze River passes through its southern parts. Jiangsu has been a hot spot for economic development and is now one of China’s most prosperous provinces.

  7. China’s Yangtze River Delta comprises the triangular territory of Shanghai, southern Jiangsu Province, and northern Zhejiang Province. The area lies at the heart of the region traditionally called Jiangnan. The region has become an important driving force in China’s economic growth. Meanwhile, the large population, factories, pollution, and heavy traffic have caused many rare species to be on the verge of extinction (Sun 2007).

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Acknowledgments

This research was supported by the innovation fund of Nanjing University, Chinese Nature Science Fund (71203154), and also partly supported by the Humanity and Social Science Youth foundation of the Chinese Ministry of Education (12YJCZH139).The author is grateful to the reviewers and Prof. D.H. for suggestions and helpful remarks. Thanks also to Zhang (Tokyo-Mitsubishi UFJ), Dr. Liu (the People’s Bank of China), the managers of Industrial and Commercial Bank of China (ICBC) and all of the respondents of the questionnaire survey, as well as Mr. Forster.

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  1. College of Management and Economics, Tianjin University, 92 Weijin Road, Nankai District, Tianjin, 300072, China

    Yong Liu & Zhongguo Lin

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Liu, Y., Lin, Z. Understanding the External Pressure and Behavior of Commercial Banks’ Environmental Risk Management: An Empirical Study Undertaken in the Yangtze River Delta of China. AMBIO 43, 395–405 (2014). https://doi.org/10.1007/s13280-013-0414-6

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