Estimation of green bond premiums on the Chinese secondary market

Kód výsledku v IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F67985556%3A_____%2F22%3A00567676" target="_blank" >RIV/67985556:_____/22:00567676 - isvavai.cz</a>

Výsledek na webu

<a href="https://polek.vse.cz/artkey/pol-202206-0003_estimation-of-green-bond-premiums-on-the-chinese-secondary-market.php" target="_blank" >https://polek.vse.cz/artkey/pol-202206-0003_estimation-of-green-bond-premiums-on-the-chinese-secondary-market.php</a>

DOI - Digital Object Identifier

<a href="http://dx.doi.org/10.18267/j.polek.1363" target="_blank" >10.18267/j.polek.1363</a>

Jazyk výsledku

angličtina

Název v původním jazyce

Estimation of green bond premiums on the Chinese secondary market

Popis výsledku v původním jazyce

Green bonds have gained prominence in China’s capital market as tools that help to fuel the transition to a climate-resilient economy. Although the issuance volume in the Chinese green bond market has been growing rapidly in recent years, the impact of the green label on bond pricing has not been adequately studied. Therefore, this paper investigates whether this newly developed financial instrument offers investors in China an attractive yield compared to other equivalent conventional bonds. By matching green bonds with their conventional counterparts and subsequently applying a fixed-effects estimation, our empirical results reveal a significant green bond yield premium of 1.8 basis points (bps) on average in the Chinese secondary market. As compared to Climate Bond Initiative (CBI) certified green bonds, we find that investors are more willing to accept lower yields (pay higher prices) to include People’s Bank of China (PBOC) certified green bonds into their portfolio management. Thus, we argue that Chinese green investors prefer PBOC certified green bond over CBI certified green bonds in the Chinese market. Driven by pro-environmental preference, investors are also found to be willing to pay a higher price for green bonds issued by environmental, social and governance (ESG) performance-rated issuers. Our results point to some practical implications for investors and policymakers.

Název v anglickém jazyce

Estimation of green bond premiums on the Chinese secondary market

Popis výsledku anglicky

Green bonds have gained prominence in China’s capital market as tools that help to fuel the transition to a climate-resilient economy. Although the issuance volume in the Chinese green bond market has been growing rapidly in recent years, the impact of the green label on bond pricing has not been adequately studied. Therefore, this paper investigates whether this newly developed financial instrument offers investors in China an attractive yield compared to other equivalent conventional bonds. By matching green bonds with their conventional counterparts and subsequently applying a fixed-effects estimation, our empirical results reveal a significant green bond yield premium of 1.8 basis points (bps) on average in the Chinese secondary market. As compared to Climate Bond Initiative (CBI) certified green bonds, we find that investors are more willing to accept lower yields (pay higher prices) to include People’s Bank of China (PBOC) certified green bonds into their portfolio management. Thus, we argue that Chinese green investors prefer PBOC certified green bond over CBI certified green bonds in the Chinese market. Driven by pro-environmental preference, investors are also found to be willing to pay a higher price for green bonds issued by environmental, social and governance (ESG) performance-rated issuers. Our results point to some practical implications for investors and policymakers.

Druh

J_imp - Článek v periodiku v databázi Web of Science

CEP obor

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OECD FORD obor

50206 - Finance

Projekt

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Návaznosti

I - Institucionalni podpora na dlouhodoby koncepcni rozvoj vyzkumne organizace

Rok uplatnění

2022

Kód důvěrnosti údajů

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Název periodika

POLITICKA EKONOMIE

ISSN

2336-8225

e-ISSN

2336-8225

Svazek periodika

70

Číslo periodika v rámci svazku

6

Stát vydavatele periodika

CZ - Česká republika

Počet stran výsledku

26

Strana od-do

684-710

Kód UT WoS článku

000926486100003

EID výsledku v databázi Scopus

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