The Impact of Environmental Disclosure on Capital Adequacy: Panel Evidence from Chinese Commercial Banks

This study investigates the relationship between environmental information disclosure (EID) and the capital adequacy ratio (CAR) of Chinese commercial banks.Based on signaling theory and from the perspective of institutional heterogeneity, the paper investigates whether: (1) EID influences banks' capital structures; and (2) whether this effect varies across ownership types.For the investigation, we utilize a quantitative index of EID as the explanatory variable and fixed effects models with lagged EID variables to analyze a panel dataset including 31 A-share listed commercial banks in China from 2013 to 2022.Based on our overall analysis, the broader sample results reveal no statistically significant effect of EID on CAR, nor evidence of lagged influence.However, our heterogeneity analysis indicates that EID has a significantly positive lagged effect on CAR in stateowned banks and a negative lagged effect in joint-stock banks.These findings highlight that the impact of EID on capital structure is not uniform but shaped by institutional context.Despite limitations in data availability and the study's timeframe, this study offers new empirical evidence linking EID to CAR, which not only fills an important research gap but also offers a new perspective for future studies on bank capital structure and environmental disclosure.