Systemic Risk, Capital Reallocation, and Yield Anomalies: Assessing the Macroeconomic and Financial Market Impact of Federal Green-Banking Regulatory Frameworks on U.S. Commercial Banking and Debt Capital Markets

• Abbas Ahsun

  Texas University

  Author

The integration of climate-aligned lending mandates into U.S. prudential supervision represents a paradigm shift in financial regulation, yet the macro-financial consequences remain inadequately understood. This study investigates the impact of federal green-banking regulatory frameworks on systemic risk transmission, capital reallocation patterns, and yield anomalies in U.S. commercial banking and debt capital markets. Employing a mixed-methods design combining retrospective analysis of 2018–2025 banking data with prospective simulation modeling, the research examines how regulatory capital requirements influence green credit allocation and market stability perceptions. Analysis of survey data from 300 finance professionals reveals that demonstrable Green-Banking Engagement (GBE) exhibits statistically insignificant coefficients for investor confidence (0.028) and market stability (0.033), suggesting an implementation gap between policy adoption and market conviction [Hossain et al., 2025]. Machine learning models applied to venture capital analytics achieve 89.4% accuracy in identifying high-growth startups, demonstrating AI's potential for optimizing capital reallocation under regulatory constraints [Ahmed et al., 2025]. The findings indicate that current green-banking frameworks generate modest capital reallocation effects while failing to materially alter systemic risk profiles, with yield anomalies concentrated in green-labelled assets exhibiting 15–20 basis point spreads relative to conventional instruments. The study contributes a replicable analytical framework for evaluating green finance regulation and offers actionable recommendations for tiered policy design based on bank size and institutional capacity.

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