Time: 13:00-15:00 (UK Time), Wednesday, 10 May 2023
Presenters: Dr Xiaoxi Qu, Bangor Business School & China Academy of Social Sciences; Professor Yener Altunbas, Bangor Business School
Chair: Professor Victor Murinde, SOAS University of London

Abstract
We document that government react to climate policy by implementing three measures (i.e. conventional monetary policy, unconventional monetary policy and fiscal support) on the sustainable economic development. On the basis of the framework of BGG model, this paper first distinguishes firm heterogeneity and bank heterogeneity. Second, the green firms who is environmentally-friendly will get soft budget constraints provided by the government and reduce the loan default rate of firms. Then, with the implementation of the green credit policy, banks can get green refinancing from the central bank, so banks adjust the loan structure under the constraint of credit leverage to achieve the goal of profit maximization. Notwithstanding consistent with adjustment cost, the positive effect decreases in three loose measures, our results suggest that unconventional monetary policy through bank lending channel is the most effective one for economic sustainability. 

Keywords: central bank, monetary policy, soft budget constraints, green credit policy 

Presenters

Xiaoxi Qu is a Visiting Researcher at the Bangor Business School and a researcher at the China Academy of Social Sciences. Her main research areas include monetary economics, regional economics and climate change. She has published papers in Ecological Economy, Financial Theory & Practice, Enterprise Economy and the Journal of Commercial Economics. 

Yener Altunbas is a Professor in Banking at the Bangor Business School. He worked first as an analyst with Ziraat and then as an economist in Etibank Banking Inc. in Turkey and as a Research Officer within the Institute of European Finance in the UK. Author of many articles on the structure and efficiency of banking markets, his main fields of research interest include empirical banking, monetary economics, climate change and regional economics. He holds a B.Sc. (Economics) degree from the University of Hacettepe, Ankara and a PhD from the University of Wales, Bangor. His papers have appeared in international refereed journals, such as Journal of Corporate Finance, European Economic Review, Journal of Money Credit and Banking, Journal of Financial Intermediation, Public Choice and Economica.