Sustainable Finance Meets FinTech: Amplifying Green Credit’s Benefits for Banks

In recent years, green credit has significantly supported the development of the sustainable economy. However, the existing literature presents differing views on the impact of green credit on bank performance, which is crucial for the sustainability of green credit business. Meanwhile, FinTech is comprehensively empowering green credit business. This paper investigates whether FinTech influences the effect of green credit on bank performance. Based on an analysis of data from 127 Chinese commercial banks from 2007 to 2022, we find that green credit significantly enhances bank performance, and FinTech further amplifies this positive effect. This finding partially explains the conflicting views in the existing literature, as the impact of green credit on bank performance varies under different levels of FinTech. We believe that FinTech exerts its influence through three mechanisms: cost reduction, reputation enhancement, and risk mitigation. Heterogeneity analysis reveals that the impact of FinTech is more pronounced in city commercial banks, in samples with better green credit development, and during banking industry downturns. Finally, we recommend that banks actively develop FinTech and apply it to green credit businesses to maximize the positive effects of green credit. Simultaneously, regulators and governments should provide necessary support for banks.